On Monday, Express Scripts Inc. completed its purchase of Medco Health Solutions Inc a former rival. The acquisition price was $29.1 billion. Once the Federal Trade Commission had given its formal seal of approval, the deal became public. The FTC completed an anti-trust investigation for eight months to see whether the merger might hurt competition.
The new company will go by the name of Express Scripts Holding and it becomes the largest pharmaceutical benefits manager in the U.S. Over 1.4 billion prescriptions are filled a year by the company for insurers and employers. Walgreens filled nearly 213 million of the prescriptions in 2011. Walgreens ended a relationship with Express Scripts on January 1 after a disagreement over contract terms that represented over $5 billion worth of business.
Because of that, Walgreens lost over 85% of all the prescriptions from customers of Express Scripts. That caused Walgreens to see its earnings drop by nearly 8%. Walgreens also filled over 125 million prescriptions for Medco in 2011 and that could means another 125 million prescriptions may be lost since Medco is now part of Express Scripts. This could cost even more earnings to be lost by Walgreens, said many analysts. Walgreen shares were up 2% on Monday to $34.16.
Walgreen said that last week it would honor its contract with Medco even after it was purchased by Express Scripts. An Express Scripts spokesperson said the company planned to honor the Medco contract with Walgreen as least for the short term.
