PBM offer raises concerns about market control; Express Scripts bid trumps CVS offer for Caremark Rx.(News)

Byline: GLORIA GONZALEZ

While the possible merger of two of the nation's largest pharmacy benefit managers has potential advantages for employers, some express concern that ongoing consolidation of the PBM industry will lead to decreased competition and, ultimately, higher prescription drug benefit costs.

St. Louis-based Express Scripts Inc. has proposed a $26 billion acquisition of its larger rival Caremark Rx Inc. in a deal that would create the largest PBM in lives covered and revenues (see box). The Express Scripts offer, if accepted, would derail Nashville, Tenn.-based Caremark's planned $21 billion merger with Woonsocket, R.I.-based CVS Corp. (BI, Nov. 6).

The PBM industry has already seen significant consolidation in recent years, with Caremark purchasing rival AdvancePCS in 2003 (BI, Sept. 22, 2003) and Express Scripts completing five acquisitions since 1998. The three largest PBMs-Franklin Lakes, N.J.-based Medco Health Solutions Inc., Caremark and Express Scripts-control 70% to 75% of the U.S. PBM market.

While the merger of CVS and Caremark was generally seen as creating significant benefits for …