The ESI-Medco Merger: Don't Overlook the Independent Pharmacist

Action is needed now to ensure that independent pharmacies are not left behind in the wake of this historic merger.

The Federal Trade Commission (FTC) recently approved the merger between Express Scripts, Inc (ESI) and Medco Health Solutions, Inc—2 of the country’s 3 largest pharmacy benefit managers (PBMs).

The independent pharmacy community can expect continued changes in the areas of network development and reimbursement, mail order penetration, and access to specialty pharmacy products. By all determinations, this merger is going to increase ESI-Medco’s ability to exert power over independent pharmacies. As the largest pharmacy benefits manager (PBM) in the country, ESI-Medco will have influence over every aspect of the relationship with the pharmacy, including:

• Reimbursement rates for network pharmacies
• Network admission practices and procedures
• Use of proprietary specialty pharmacy and keeping independent pharmacies outside the PBM’s “specialty pharmacy networks”

It certainly does appear that this merger is going to give ESI-Medco a great deal of control over the ability of the independent pharmacy to conduct business. It should be pointed out, though, that ESI-Medco would not actually have such power over plan sponsors. I do not think that the FTC comprehended that ESI-Medco will be able to funnel medications into the restricted specialty pharmacy networks and away from independent pharmacies. The PBM is in a position to define specialty pharmacy products any way they want, and restrict access to any number of high-margin products.

What is needed at this time is intelligent construction of state mandates that can protect the independent pharmacy from being shut out of access to these patients. Some state laws that are not drafted well apply only to HMOs, PPOs, or other health insurance plans. They do not extend to PBMs. Others still specifically exclude pharmacies from certain benefits, such as the any willing provider or fast payment of claims.

Many of these laws do not reflect an understanding of the landscape presented by the many PBMs that have developed and must be updated and streamlined. Many of these issues need to be addressed in regulations that help to prevent these types of loopholes from existing and expanding. It is important for the independent pharmacies to act as a group and use their advocates such as the National Community Pharmacists Association to help fight these issues on their behalf.

When patients arrive at their local pharmacy, they are greeted by a group of professionals that know them as well as their family. Pharmacists are in the best position to coordinate care for the patient and work with the caregiver to insure that the patient is started on therapy as quickly as possible—and then maintained on that therapy.

Independent pharmacies that frequently anchor traditional main streets around the country will vanish if the merger is allowed to impose draconian policies in regard to network access and reimbursement unchecked.

While it is true that some therapies are well served by a central fill operation, many specialty therapies require a personal touch to get the maximum benefit. What is needed now is a dialogue between large PBMs such as ESI-Medco and the independent pharmacy community, so that networks can be structured to the benefit of both types of industry. Networks that provide flexibility that can accommodate a central fill option for those patients who would like that service, but also provide a local option for patients who would like and need that kind of attention to be successful on therapy. I would venture to guess there are many multiple sclerosis, rheumatoid arthritis, and oncology patients who would appreciate the personal touch of a skilled and passionate pharmacist.

Now is the time to begin this discussion and for the managed care community to realize the value of the independent pharmacy as a partner in the treatment of the difficult patient. Independent pharmacists are typically available at all hours to manage their patients. They would be a great aid in helping a plan realize its value proposition. Let’s begin the discussion now before this valuable service becomes a thing of the past.

About the Author

Nicodemo “Nick” Calla, RPh, JD, is vice president of industry relations, Community Specialty Pharmacy Network. He is an editorial board member of Specialty Pharmacy Times.