Benefits January 9, 2003

Merck, Medco Collusion Alleged

January 9, 2003 (PLANSPONSOR.com) - Court documents unsealed on Tuesday show Merck & Co may have used its subsidiary, pharmacy-benefits manager (PBM) Medco, to sharply increase the market share of Merck drugs, according to the Wall Street Journal.

Reported by

Eric Hazard

The latest disclosures in a suit originally filed by a Medco plan member, reveal for the first time market-share figures for Merck products among Medco clients. The unsealed documents show that sales in Zocor, a cholesterol-lowering drug, represented a whopping 41% of all cholesterol-lowering drugs dispensed to Medco mail order customers, compared to a nationwide market share of only 22% in December of 1999, the last year for which the documents detail information.

Additionally, two other Merck drugs, blood-pressure medications Prinzide and Prinivil, had market shares among Medco mail members that were three times higher than those drugs’ national market shares. Prinzide had a national market share of less than 9% in 1999, but a Medco mail-order market share of 27%. Prinivil had a national market share of 13%, but a Medco mail-order market share of 39%.

Further, the documents indicate that a large number of those Americans were switched to Merck products after their doctors prescribed a competitor’s drug. Currently, Medco is the country’s second-largest PBM, controlling the prescription plans of 65 million Americans.

“Mercky” Waters

Merck fervently denies the claims. In a letter to the Food and Drug Administration (FDA) in 1998, Merck stated Medco’s programs “are developed independently of Merck or other manufacturers and that Medco continues to operate in the interests of its clients, the payers for prescription benefits.” At the time, the FDA was looking to regulate PBMs, though the government agency backed off after several PBMs and drug companies protested.

Also, in the same year, Merck signed a settlement agreement with the Federal Trade Commission (FTC), after the agency found that “Medco has given favorable treatment to Merck drugs. As a result, in some cases, consumers have been denied access to the drugs of competing manufacturers.” The FTC said that the “settlement would require Medco to take steps to diminish the effects of any unwarranted preference that might be given to Merck’s drugs over those of Merck’s competitors.”