A Coming Hit to Small Businesses From an Unexpected Source

Curt Emick
Apple Valley Mayor and Pharmacist

California’s small businesses should be bracing for another hit to the expense side of their ledgers.

This time, the threat doesn’t come from a piece of legislation or new regulations being implemented — it comes from the pharmacy industry.

Express Scripts and Medco Health Solutions are prepping to merge as soon as the beginning of 2012. They are what are known as “pharmacy benefit managers” — essentially the go-betweens who negotiate reimbursement rates for prescription drugs between health insurers and pharmacies. If the Federal Trade Commission approves their merger, they will control a whopping 80 percent of the supply line for the private retail pharmacy market.

That kind of excessive market control will, inevitably, mean lower reimbursements to pharmacies and higher costs to to insurers, who will just pass along the new costs onto consumers. Companies that provide health benefits to their employees will feel the brunt of the increase resulting from the merger.

For small businesses already struggling to keep up with the ever-increasing cost of health care, these additional costs will certainly bear the blame for layoffs. Job losses are the last thing our state’s unemployment rate needs.

It speaks volumes that those opposing the Express Scripts-Medco merger are not advocates for social services, they are pharmacists and small businesses. Their argument: the merger will put small independent pharmacies out of businesses, reduce competition in the health care delivery system, and cause health care costs to rise.

For all their focus on economic stimulus and job creation, lawmakers ought to pay attention to this anticompetitive merger and protect the jobs we already have. They ought to press the FTC to deny the merger.

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