Pharmacy Groups File Suit Against Express Scripts, Medco Deal
March 29 2012 - 01:40PM
Dow Jones News
Two pharmacy trade groups and several pharmacy companies filed a
lawsuit in federal court Thursday aimed at trying to stop Express
Scripts Inc. (ESRX) from buying rival pharmacy-benefit manager
Medco Health Solutions Inc. (MHS).
The National Association of Chain Drug Stores and National
Community Pharmacists Association have strongly opposed the deal
since it was announced last summer, arguing the combined company
will gain clout to boost costs through higher fees and drug prices.
Express Scripts and Medco--which expect the deal could close as
early as next week--have argued that joining forces means more cost
savings they can pass on to customers.
The companies are awaiting clearance from the Federal Trade
Commission following a lengthy antitrust review. The FTC and U.S.
Department of Justice are the entities that typically go to court
when they believe a proposed merger is anti-competitive, and
private-party lawsuits to stop deals face long odds.
Express Scripts shares recently traded down 1.3% to $53.21 while
Medco shares were down 0.9% to $70.55. Medco is trading just
slightly below the purchase price in the cash-and-stock deal,
indicating high expectations among investors the companies will win
approval.
One potential sticking point is a combined company's
concentration in the market for pricey drugs used to treat cancer
and other conditions. The FTC is taking a hard look at whether the
merger would impede patient access to these "specialty drugs," the
Wall Street Journal reported Wednesday. The proposed companies'
heft in the specialty market is one of the issues spotlighted by
the retail pharmacies.
Express Scripts declined comment on the lawsuit Thursday. On
Wednesday, both Express Scripts and Medco said in regulatory
filings that their deal may close as early as next week, indicating
FTC approval could be close at hand. The companies also said
closing the deal is "subject to satisfaction or waiver of the
remaining closing conditions."
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com
--Brent Kendall contributed to this article.
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