Missouri-based Express Scripts has launched a take-over bid for Nashville-based Caremark R-X. Both companies are pharmacy benefit managers, which administer prescription drug plans.
CVS, the drugstore chain, had already reached an agreement to buy Caremark for about 21-billion dollars. Express Scripts is topping that offer by about 5-billion dollars.
The bid has been termed hostile since it was unsolicited.
Vanderbilt economist Luke Froeb says it’s no surprise that companies are looking to become more competitive. He says mergers often happen in response to changes in the regulatory environment or as a result of technological innovations.
“And there’s no environment changing more than health care. You’re seeing at the governmental level more pressure being exerted into the system with things like health savings accounts…That consumer pressure into the health care supply chain if you will is putting more and more pressure on the providers of health care in general and drugs in particular.”
Froeb was also the Director of the Bureau of Economics at the Federal Trade Commission for two years. He says the merger could be a response to consumer-driven health care, where employers purchasing health care coverage for their employees demand lower prices. Froeb says retailers such as Wal-Mart and Target that are offering deeply discounted generic drugs, also put pressure on the market.
Caremark issued a statement today that said it continues to be bound by last month’s proposed merger with CVS.
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