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Pharmacy Benefit Managers: Too Powerful?
CNBC.com | March 05, 2012 | 07:46 AM EST

Any week now, the Federal Trade Commission is expected to rule on the proposed merger between Medco Health Services and Express Scripts.

Trouble is, outside of Wall Street and the drug industry, there’s little interest in the deal.

That’s because by its very nature, the arcane world of pharmacy benefit managers isn’t exactly the thing of dinner table conversation.

Yet what they do is.

They’re the middleman between you, your drug store and your insurer.

They control the cost of what you pay for drugs and which drug stores you should use. And based on deals they strike with drug companies, they even try to influence what drugs you take—in some cases refusing to fill the script recommended by your doctor.

I’d go so far as to say they’re the key player in what some might argue is one-step removed from a legal drug cartel.

“Few markets are as concentrated, opaque and complex and subject to rampant anticompetitive and deceptive conduct such as the PBM market,” is the way industry critic David Balto, a former FTC lawyer, put it in testimony before the Department of Labor in 2010 regarding PBM transparency.

The deal, if approved, would shift the industry to a duopoly from oligopoly.

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