By Dennis Archer
After graduating from Western Michigan University, I was privileged to teach and work with some very important people—learning disabled children. These children needed a quality education and for someone to stand up for their rights – they needed a voice.
After becoming Mayor of Detroit, I dedicated myself to repairing the relationship between the city and the suburbs—standing with these communities and providing an opportunity for us to come together.
Today, I am “called” to take a stand – on behalf of the citizens of our society who depend on community pharmacies and the services they provide in rural and urban areas across America. These Americans are concerned about their prescription costs and access to services that will be severely limited if the Federal Trade Commission (FTC) approves Express Scripts’ bid to acquire Medco.
The FTC is in the final stages of reviewing a proposed merger between these two pharmacy benefit managers (PBMs). As two of the three largest PBMs in the country, these companies already hold immense market share. If allowed to merge, the new mega-PBM will have overwhelming market power to stifle competition and further promote their mail-order business.
A short list of practices employed by the PBMs include:
• Exclusive dealing: As wholesalers, PBMs promote deals with pharmacies to reduce their fees in exchange for access to customers. On the flip side, they also provide drug manufacturers a higher volume of sales in return for discounts and rebates. These dealings lack transparency, are considered proprietary and are undisclosed because their business practices are unregulated. Thus, the patients and insurers do not always benefit from the “so-called” cost savings.
• Price fixing: PBMs have the ability, without regulation, to deal independently between manufacturers and pharmacies setting drug prices for specialty medication and determining when to use generics. Pharmacies must comply or lose their business relationship, and may be forced to close their doors.
• Limit pricing: By virtue of using their own mail-order pharmacies, PBMs can easily bypass retail pharmacies, contacting customers who purchase routine medications directly and offering a lower price. This is an unregulated business.
As a lawyer and an advocate for consumers, I disagree with this anticompetitive behavior. I urge the FTC to block this merger. Moreover, legislators would be remiss for not closely examining the lack of regulation in PBM practices. A free market thrives on competition.
Dennis W. Archer was the mayor of Detroit from 1994 to 2001. Before that, he served on the Michigan Supreme Court from 1986 to 1990. After leaving public office he became the first African American president of the American Bar Association in 2002-2003. He received his Bachelor of Science degree in education from Western Michigan University, and his law degree from the Detroit College of Law in 1970. Currently, he is Chairman of the Detroit-based law firm Dickinson Wright. He has received numerous accolades from a variety of national organizations and media for his tenure as mayor and his achievements as a lawyer.