Lawmaker says safeguards may be needed if prescription drug merger goes through

TRENTON – New Jersey lawmakers don’t have any say in a proposed $29 billion merger between two of the largest prescription benefit management companies in the United States, but the Assembly State Government committee hosted a hearing on the proposal Monday anyway because the committee chair says she’s gathering information that may be used to put protections in place here should the merger go through.

“What I’ve heard today at the hearing is leading me to believe that while this (proposed merger) may be good for Express Scripts and Medco, it’s probably bad for New Jersey,” Chairwoman Linda Stender, (D-22), Fanwood, told State Street Wire after a 90-minute hearing.

And while the merger proposal – undergoing intense scrutiny from Congress – isn’t something state lawmakers have a say in, it is something that is likely to impact everything from Medco Health Solutions corporate headquarters in Franklin Lakes to mom and pop and even chain pharmacies, to the state’s and public schools’ prescription program.

That’s because Medco handles prescriptions with the state and public schools benefits plans, which together spend some $1.2 billion a year, said Dudley Burdge, a state CWA union representative who testified before the committee.

Stender says she held the hearing to “consider codifying regulations and look at legislation that will separate the functions of the manager and the provider, because it seems to me you can’t do both without there being an inherent conflict.”

Andrew Friedell, in charge of government affairs for the Northeast for Medco, told the committee a merger would result in a billion dollars worth of savings for consumers. But he said in answer to questions that he didn’t know whether there would be layoffs or how many jobs, if any, would be axed at the company’s corporate headquarters or what the impact might be on local pharmacies.

He said a merger of the two companies would be “the right combination for patients, payers and jobs here in the state of New Jersey.”

Friedell disputed arguments that the merger would result in a near-monopoly by combining the first and third largest pharmaceutical benefits companies in the U.S. with a combined customer base of 115 million Americans, or fully a third of the market.

He said there was still much competition in the field as well as strong growth in independent pharmacies.

But he was challenged on all fronts by committee members and other witnesses.

Assemblyman Gary Schaer, (D-36), Passaic, noted that the growth of independent pharmacies – 400 in a year compared to 23,000 existing stores – amounted to just 1.73 percent, a rate Schaer called “at best tepid.”

David Schwed, a pharmacist who is no longer practicing, says he was driven out of business in South Jersey because of a one-two punch delivered by pharmaceutical benefit managers. On the one hand, he said, the companies are requiring more and more customers to go through mail order. On another, he said the companies forced him to suffer losses by entering into contracts for prescription medications.

A lobbyist for the National Community Pharmacists Association echoed those sentiments.

But one lobbyist for pharmaceutical companies who didn’t testify says the big pharmaceutical management companies are saving consumers money on their prescriptions through bulk buying and prescriptions-by-mail.

He said the independent pharmacists are refusing to see the changing times.

“They’re buggy whip manufacturers,” the lobbyist said, asking not to be identified. “They’re like the guys who made (wagon) wheels and don’t want to see that change is coming.”

Also Monday, the committee approved a measure (A3919) that eliminates the operations of the superintendent and deputy superintendent of elections in Morris and Camden counties. It’s a pilot program lawmakers say is geared toward saving taxpayer dollars.

  Lawmaker says safeguards may be needed if prescription drug merger goes through