Medco And Express Scripts Specialty Share Could Top 50%

Express Scripts buying Medco – This is still the big topic of discussion (see original comments with links added since I was on vacation last week with no wireless access).  The question of course begins to shift to the FTC approval.  According to one report out, one analyst estimated that the combined entity would have 30-35% of the PBM market in terms of script volume, and they estimated what the Herfindahl-Hirschman Index would say about market concentration post merger – heavily scrutinized but not a big issue.  I would agree from a claims perspective that this probably won’t be an issue.

I’ve only seen one analyst bring up the issue of mail order concentration which Medco has always led in.  I’m not sure this will be a sticking point since mail is still typically optional.  Where I would be interested in seeing the HHI would be in specialty.  Given that 28% of the time only one specialty pharmacy (SP) is contracted with and 57% of the time it’s 1-2 SPs, this seems like a bigger area of focus and potential control.  (per EMD Serono Specialty Digest)  It’s also clearly the future of the pharmacy and PBM market. 

If you use Adam Fein’s estimates from his 2010-11 Economic Report on Retail and Specialty Pharmacies, the combined Curascript and Accredo market share would be somewhere around 52% which would seem high for one entity.  [I’m sure Walgreens or CVS (among others) would be happy to buy some of their specialty assets if that made the deal more likely.]  More to come as I catch up.