Bill Text: NJ SR58 | 2012-2013 | Regular Session | Introduced
Bill Title: Urges Governor to oppose merger of pharmacy benefit managers Medco Health Solutions and Express Scripts Inc.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2012-05-31 - Withdrawn from Consideration [SR58 Detail]
Download: New_Jersey-2012-SR58-Introduced.html
Sponsored by:
Senator LORETTA WEINBERG
District 37 (Bergen)
SYNOPSIS
Urges Governor to oppose merger of pharmacy benefit mangers Medco Health Solutions and Express Scripts Inc.
CURRENT VERSION OF TEXT
As introduced.
A Senate Resolution respectfully urging the Governor to oppose the merger of pharmacy benefit managers Medco Health Solutions and Express Scripts Inc.
Whereas, Pharmacy benefit managers are third party administrators of prescription drug programs who are responsible for processing and paying prescription drug claims, contracting with pharmacies and negotiating discounts and rebates with drug manufacturers; and
Whereas, Medco Health Solutions, based in Franklin Lakes, New Jersey, is the largest pharmacy benefit manager and mail-order pharmacy operation in the United States; and
Whereas, Express Scripts Inc., based in St. Louis, Missouri, is the third largest pharmacy benefit manager in the United States, behind Medco Health Solutions and CVS/Caremark; and
Whereas, There is a proposed $29 billion acquisition of Medco Health Solutions by Express Scripts Inc., which would result in one merged entity; and
Whereas, Medco Health Solutions currently employs approximately 4,000 people in New Jersey, including 1,200 people at its mail-order pharmacy in Willingboro, New Jersey and more than 2,000 people in Bergen County, New Jersey, making it one of that county's largest employers; and
Whereas, If the merger between Medco Health Solutions and Express Scripts Inc. is approved, analysts have speculated that it is likely that New Jersey operations would be cut back significantly, leading to a large number of layoffs in this State; and
Whereas, Permitting the merger would result in unparalleled market concentration with the merged entity controlling at least 32% of all prescriptions, 50% of the large plan sponsor market and over 50% of the specialty pharmacy market in the United States in addition to becoming the largest mail-order pharmacy in the United States, accounting for close to 60% of all mail-order prescriptions processed; and
Whereas, This market dominance and significant reduction in competition will leave customers with reduced choices and limited bargaining power, allowing pharmacy benefit managers to charge plan sponsors more for their services which will inevitably be transferred to the patient; and
Whereas, The merged entity would have greater power to steer plan participants to its own mail-order pharmacy by providing incentives such as lower co-payments, by limiting the pharmacies in the participant's network or by requiring mandatory mail-order prescriptions, thereby preventing the patient from using the pharmacy of their choice and restricting their access to services offered by highly trained community pharmacists who provide education on medications and recommend lower cost alternatives; and
Whereas, The merged entity will have a greater ability to drive reimbursement to pharmacies down below competitive levels, forcing pharmacies to raise prices, cut back on hours, services and employees, thereby threatening the existence of community pharmacies; and
Whereas, As the Federal Trade Commission is expected to make a decision in March 2012 regarding whether they will approve the merger or sue to block it, there is an immediate need to act in opposing this merger; now, therefore,
Be It Resolved by the Senate of the State of New Jersey:
1. The Senate respectfully urges the Governor of the State of New Jersey to oppose the merger of pharmacy benefit managers Medco Health Solutions and Express Scripts Inc.
2. Duly authenticated copies of this resolution, signed by the President of Senate and attested to by the Secretary thereof, shall be transmitted to the Governor of the State of New Jersey.
STATEMENT
This resolution urges the Governor to oppose the merger of pharmacy benefit managers Medco Health Solutions and Express Scripts Inc. Pharmacy benefit managers are third party administrators of prescription drug programs who process and pay prescription drug claims, contract with pharmacies and negotiate discounts and rebates with drug manufacturers.
Medco Health Solutions, based in Franklin Lakes, New Jersey is the largest pharmacy benefit manager and mail-order pharmacy operation in the United States and employs approximately 4,000 people in New Jersey. Express Scripts Inc., based in St. Louis, Missouri, is the third largest pharmacy benefit manager in the United States. There is a proposed $29 billion acquisition of Medco Health Solutions by Express Scripts Inc.
If the merger is approved, analysts have speculated that it is likely for Medco Health Solution's New Jersey operations to be cut back significantly, leading to a large number of layoffs in this State.
In addition, a merger would result in unparalleled market concentration with the merged entity controlling at least 32% of all prescriptions in the United States and becoming the largest mail-order pharmacy in the United States, accounting for close to 60% of all mail-order prescriptions processed. This market dominance will leave customers with limited bargaining power, allowing pharmacy benefit managers to charge more for their services. The increased cost will inevitably be transferred to the patient.
The merged entity would also have greater power to steer plan participants to its own mail-order pharmacy by providing incentives such as lower co-payments, by limiting the pharmacies in the participant's network or by requiring mandatory mail-order prescriptions, thereby preventing the patient from using the pharmacy of their choice and restricting their access to community pharmacists.
Lastly, the merged entity would have a greater ability to drive down the reimbursement rates for community pharmacies, forcing pharmacies to raise prices and cut back on hours, services and employees, thereby threatening the existence of community pharmacies. As the Federal Trade Commission is expected to make a decision in March 2012 regarding whether they will approve the merger or sue to block it, there is an immediate need to act in opposing this merger.
