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Express Scripts-Medco deal could fuel other acquisitions

Post-Dispatch, July 26, 2011

Express Scripts Inc.'s takeover of Medco Health Solutions Inc. may fuel acquisitions of specialty pharmacy benefit managers by rivals seeking to gain enough size to negotiate lower prices with drug makers. Once the deal closes, the number of people served by St. Louis-based Express Scripts would rise by 50%, to 135 million, based on current data, said Art Henderson, an analyst at Jefferies & Co. The next biggest rival, CVS Caremark Corp., serves 85 million people. Pharmacy services companies negotiate prices with drug makers for employers and governments, and manage worker claims. More customers give them added leverage to insist on lower prices, providing savings that may be used by the companies to reduce expenses or compete for contracts. Size also helps companies accumulate data to develop efficient disease management programs and weigh treatment cost effectiveness.