NCPA Disappointed in FTC/DOJ Guidelines on Vertical Mergers

More needed to protect patients and their providers from unfair mega-merger practices, says National Community Pharmacists Association

NCPA June 30, 2020

ALEXANDRIA, Va. (June 30, 2020) – The National Community Pharmacists Association today expressed disappointment that new guidelines issued by the Federal Trade Commission and the Department of Justice don’t go far enough to rein in mega-companies in the health care space that often operate like monopolies.

“These massive integrated health care companies now control nearly all aspects of the health care and pharmacy supply chain,” said NCPA CEO B. Douglas Hoey. “The new guidelines issued today by the FTC and DOJ don’t do enough to reverse that trend, and we are deeply disappointed.”

NCPA submitted comments to the FTC and DOJ in February urging the agencies to be more cautious before approving mergers, such as CVS/Aetna. “These vertical mergers have allowed a handful of massive companies to exercise enormous power over patients and the marketplace. In many cases, we believe they are creating for themselves unfair advantages that are driving up patient costs and killing local businesses,” said Hoey.

Two of the five FTC Commissioners disagreed with the guidelines released today, including FTC Commissioner Rohit Chopra, who cited NCPA’s comments in his dissent. The new guidelines “do not directly address the many ways that vertical transactions may suppress new entry or otherwise present barriers to entry,” said Chopra.

NCPA pointed out in its comments that the three largest pharmacy benefit managers now control more than three quarters of all prescriptions filled by American consumers. And, because of merger mania over the last five years, all of them now have corporate ties to large pharmacy chains or health insurers. Instead of producing the promised efficiencies, drug costs for consumers and employers continue to rise and, in many cases, the mergers left many local communities without access to a pharmacy.

“These mega corporations have a strong incentive to exclude smaller competitors from preferred networks, or to steer consumers to their own pharmacies,” said Hoey. “There’s nothing competitive about those practices, and they are killing Main Street, family-owned pharmacies that have been serving their communities for years, and sometimes decades.”

“Independent pharmacies are not afraid of competition,” said Hoey. “We’ve seen how nimble and innovative they can be during the COVID-19 crisis. But they can’t be expected to stay in business when prescription reimbursements are lower than their cost of acquisition, or when insurance companies steer patients to the chain pharmacies they now own. That’s not a business model. It’s a ‘going-out-of-business’ model for independent pharmacies.”

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NCPA