Pharmacy Benefit Management Companies, Express Scripts and Medco Health Solutions, to Merge

In late July, pharmacy benefit managers (PBMs) Express Scripts and Medco Health Solutions announced their plans to merge. As background, PBMs process prescriptions for payers (e.g., insurance companies), using their size to negotiate deals and discounts with pharmacies and drug companies. If the Express Scripts/Medco merger goes through, they are expected to process prescriptions for about 135 million people – over one-third of the US population, more than any other PBM. It remains unclear what impact the merger will have on drug prices and prescriptions for people with diabetes. On the one hand, Express Scripts/Medco Health Solutions’ combined size might allow them to bargain with drug makers for lower prices and pass those savings on to consumers. However, because both companies emphasize efficiency and the use of generics, people receiving prescriptions through Express Scripts and Medco might also face more pressure to use mail-order services and generics. While generics (e.g., sulfonylureas, metformin) play an important role in diabetes management and keeping healthcare costs down, they are not always able to bring about adequate (to say nothing of optimal) control of blood sugar levels for people with diabetes. We are not fans of Medco’s mission to have more patients use generics because we think this makes it more difficult for doctors and nurses to individualize treatments. -–LR/KC