FTC testifies on anticompetition potential of an independent pharmacy bloc

WASHINGTON — The House Judiciary Committee's Subcommittee on Intellectual Property, Competition and the Internet on Thursday morning heard testimony regarding H.R. 1946, "Preserving Our Hometown Independent Pharmacies Act of 2011." Originally introduced by Reps. Tom Marino, R-Pa., and Louie Gahmert, R-Texas, the bill is intended to exempt independent pharmacists from antitrust regulation in an effort to bolster their negotiating powers with pharmacy benefit managers.



The Federal Trade Commission testified against the measure, stating that the bill would likely lead to higher healthcare costs due to diminished competition.



"Health plans would be forced to pay higher drug dispensing fees to pharmacists, undermining the plans' ability to control drug costs … which in turn would lead to higher insurance premiums, or changes in coverage such as increased deductibles or higher co-pays," testified Richard Feinstein, director of the bureau of competition for the FTC. "Although the commission is sympathetic to the difficulties community pharmacies face, the proposed [antitrust] exemption threatens to raise prices to consumers for much-needed medicine, which would have an especially dire impact on seniors," Feinstein said. "It also threatens to increase the cost to employers who provide healthcare insurance to employees and retirees, which may cause those employers to reduce or eliminate benefits. And there is no assurance that the proposed exemption would produce any offsetting higher quality care."



The testimony may prove controversial if the FTC approves the merger between Express Scripts and Medco as early as next week, as many news reports have speculated will happen.



Critics of that merger suggested the PBM created by an Express Scripts/Medco merger would similarly lead to higher insurance premiums and changes in coverage, such as increased deductibles or higher co-pays, threatening to raise prices to consumers for much-needed medicine that would have an especially dire impact on seniors without any assurance that the proposed merger would produce any offsetting higher quality care.



"There are few mergers I've ever seen that are as anticompetitive as this meger," David Balto, antitrust attorney and former FTC policy director told reporters Wednesday afternoon during a press conference convened by the Preserve Community Pharmacy Access NOW! coalition — a coalition of pharmacy interests specifically formed in opposition of the proposed Express Scripts/Medco merger. Balto pointed out that as many as 78 Congress members have written the FTC advocating that this merger be disallowed precisely because of its anticompetitive potential. The coalition convened the press conference to call on all state attorneys general to file suit against the ESI/Medco merger should that be approved by the FTC.



Express Scripts early Wednesday filed a Form 8-K with the Securities Exchange Commission that they expect the proposed merger to close as early as next week, suggesting that an FTC decision may be imminent.



According to published reports, attorneys general in New York, Pennsylvania, Ohio, Texas and California already are considering filing suit to block the merger if it is passed without serious conditions.