When Express Scripts Inc. said Monday that it had completed its $29.1 billion acquisition of Medco Health Solutions Inc., Express Scripts became both the largest national employer in the St. Louis region and the largest pharmacy benefits manager nationwide – by far – with more than $100 billion in annual revenue.
Last year, Medco (the largest pharmacy benefits manager, or PBM) had $70 billion in revenue and Express Scripts (the third-largest PBM) had $46 billion in revenue.
The Federal Trade gave its blessing Monday morning, voting 3 to 1 in favor of the deal, which has raised anti-trust concerns. The acquisition was approved by shareholders in December.
“For once, a St. Louis company is the acquirer as opposed to being acquired,” said Mike Jones, senior policy analyst for County Executive Charlie A. Dooley, voicing a celebratory tone heard throughout the region.
“This is outstanding news for the entire bi-state region and is a great example of the entrepreneurial spirit of St. Louis,” said St. Louis Regional Chamber and Growth Association (RCGA) Executive Vice President for Economic Development Steve Johnson.
“This is a transformative development in the health care industry. The Express Scripts/Medco deal makes an existing Fortune 100 headquarters company an even greater success in our region.”
An Express Scripts spokesperson said three Medco executives would be moving to Express Scripts – Glen Stettin, senior vice president of clinical, research and new solutions; Tim Wentworth, senior vice president of sales & account management; and Brian Griffin, a senior vice president of international and subsidiaries – but would not speculate on any impact on jobs.
“In terms of job numbers, we’d rather not speculate on any site,” said Express Scripts spokesperson Brian Henry.
“But if you look at our history in St. Louis, this is the third merger completed in the past decade or so, and in that time we’ve doubled the size of the company, this will be third time. When we’ve done that, each time we’ve seen growth in St. Louis facilities.”
Michael Holmes, a former executive vice president who left Express Scripts to found the not-for-profit Rx Outreach, was more willing to speculate.
“This will provide great opportunities for employment in St. Louis,” Holmes said. “Probably they will have to rationalize some redundancies that exist, but in the aggregate there will be more opportunities in St. Louis in the long run than most people realize.”
Express Scripts is headquarted at North Park in North County, adjacent to the campus of the University of Missouri – St. Louis. The location alone raises hopes for a positive economic impact on the black community.
“In the African-American community, we have to ask the advantage question – where am I in this?” said Mike Jones. “St. Louis is going to be bigger and stronger in one of the most prominent industries in the country. The question is, how do we take that and begin to figure out what our participation can or should be?”
U.S. Rep. Wm. Lacy Clay represents Missouri’s majority-black 1st Congressional District, where Express Scripts is located.
“We hope the hierarchy of the company will reflect the makeup of this community and that their corporate giving also will reflect the needs of the entire St. Louis community,” Clay said. “I look forward to growing that partnership with Express Scripts.”
According to an Express Scripts spokesperson, minorities comprise 37 percent of the company’s total workforce. African Americans make up 26.3 percent of its workforce in St. Louis.
“We consider varied points of view to be a positive force that stimulates creative thinking and fosters an environment built on mutual respect,” George Paz, CEO of Express Scripts, said in a statement to The American. “Being actively committed both to building a diversified workforce and to working with diversely owned businesses makes us a stronger, more competitive company.”
In terms of “growing partnerships” with the community, as Congressman Clay calls for, an Express Scripts spokesperson said the company’s diversity initiative includes seeking to “develop meaningful partnerships with small and diverse-owned businesses,” creating “successful partnerships with diverse businesses that help strengthen our capabilities” and active involvement in the National Minority Supplier Development Council, Women’s Business Enterprise National Council and their local affiliates.
Jones pointed out that it is easier to grow minority inclusion when a company is growing, which has not been the typical case in St. Louis, for the most part, for decades.
“It’s easier to have conversation – where am I in all of this? – when you are on the winning side,” Jones said. “That’s been our problem in the last 50 years: we’ve been losing businesses, not acquiring them.”
Holmes, the former senior Express Scripts executive, said there is room for African Americans in the company’s pending growth.
“African Americans will be able to compete effectively for these jobs,” Holmes said. “Like with any large employer, you’ve got to be good to work there or you’re not going to make it. But if you are good, you can have a great career there.”
Express Scripts has a very large pharmacy on-site, so Holmes foresees more positions for pharmacy technicians and “sundry jobs that you expect in corporate America.” He anticipates a positive economic spillover effect to North County.
“They chose specifically to be on that campus, and they will help to revitalize that area,” Holmes said. “We will see new restaurants and other support organizations.”
This win for North County and the St. Louis region could face a challenge in the courts. Last week, an alliance of drugstores and community pharmacists filed a federal lawsuit to block the deal, saying it would create a giant pharmacy benefits manager with too much leverage and market share. The plaintiffs have sought to prohibit the merger until the litigation has been resolved, but many community pharmacists concede that they are not likely to succeed in blocking the deal in the courts.
The deal creates a pharmacy benefits manager able to handle the prescriptions of about 135 million people, more than one-third of all Americans.
