Pharmacy allowances administrator Express Scripts is affairs Medco in a $29 billion deal.
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NEW YORK (CNNMoney) -- While a multi-billion dollar alliance of Express Scripts and Medco is far from a done deal, analysts say it could potentially save money for consumers if it is accustomed by regulators.
"The achievement for consumers, which is the case that these companies will accomplish to regulators, is that the alliance will drive bottomward all-embracing bloom affliction costs," said Morningstar analyst Matthew Coffina.
Still, Coffina said the allowances to consumers will be actual aberrant because of how decree biologic affairs operate.
A alliance of Express Scripts and Medco creates a abundant beyond article that could again use its new admeasurement and bazaar ascendancy to arrangement harder with drugmakers for bigger rebates and with pharmacy chains to get lower agreement ante on claims, said Coffina.
Both these changes would aftereffect in lower bloom affliction costs.
While consumers can buy biologic advantage affairs anon from pharmacy allowances managers such as Express Scripts (ESRX, Fortune 500) and Medco (MHS, Fortune 500), best consumers accept both bloom allowance and biologic advantage through their jobs.
Companies such as Medco and Express Scripts administer the biologic affairs for employers. So if an Express Scripts-Medco accord allows these companies to canyon forth amount accumulation to employers, Coffina said the crawl bottomward aftereffect to consumers could be in the anatomy of lower premiums or added acceptable biologic advantage plans.
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On Thursday, Express Scripts appear it had active a $29 billion accord to buy Medco Bloom Solutions.
The deal, which is accountable to authoritative approval, would absorb Medco, the No. 1 pharmacy allowances manager, and Express Scripts, No. 3.
Coffina said that aspect of the alliance agency regulators will booty an abnormally adamantine attending at the accord to see if consumers will be bigger or worse off as a result.
The companies said that Medco shareholders will accept $71.36 per share, in banknote and stock, based on the Wednesday closing price, for a absolute of $29.1 billion.
The new aggregation will be alleged Express Scripts Captivation Company. Upon closing of the deal, Express Scripts shareholders will authority about 59% of the captivation aggregation and Medco shareholders will own 41%.
The companies said the alliance will abate costs for barter through greater efficiency, partly by streamlining the accumulation chain.
But the proposed alliance did accept some critics. The Civic Community of Pharmacists Associations said the accord amid Express Scripts and Medco "would abate antagonism and accession bloom affliction costs."
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"Congress and the Federal Trade Commission should adios this proposed merger," NCPA's B. CEO Douglas Hoey, said in a statement.
"As [regulators] analysis this proposal, they should not discount the near-monopoly it would authorize in assertive regions of the country and in the civic mail adjustment market, both for acceptable and all-encompassing drugs," he said.
Prescription plan administration has developed in acceptation as the nation's citizenry ages and Americans await added on bloom allowance coverage.
The new aggregation would attempt with CVS Caremark (CVS, Fortune 500), which combines a acceptable pharmacy alternation with a decree administration plan, as able-bodied as pharmacy chains Walgreen (WAG, Fortune 500) and Rite Aid. (RAD, Fortune 500)
Separately, Medco additionally appear Thursday that it will not renew its arrangement with UnitedHealthcare (UHC) afterwards it expires on Dec. 31, 2012.
Although the alliance advertisement seemed to adumbrate this news, Coffina and others acicular to its relevance.
UnitedHealthcare is Medco's better customer, according to Jeff Jonas, analyst with Gabelli & Co. He estimates that UnitedHealthcare accounts for about 15% of Medco's sales and about 5% of its profits.
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"Medco has absent three big affairs afore this. Losing UnitedHealthcare is a big blow," he said. "It's not hasty again that Medco was accessible to a merger."
About 12 actor UnitedHealthcare consumers get their decree drugs advantage through Medco, according to UnitedHealthcare agent Don Nathan.
Nathan said that, alpha in 2013, those consumers will see a "seamless transition" into UnitedHealthcare's centralized PBM, OptumRx.
-- CNNMoney biographer Aaron Smith contributed to this report.
-- Gabelli & Co. owns shares of both Medco and Express Scripts and Jeff Jonas additionally alone owns shares of Medco.Matthew Coffina does not own shares of Medco or Express Scripts.
First Published: July 21, 2011: 6:58 AM ET
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