Pharmacists Seek to Bar Industry Mergers
Independent pharmacists, concerned that they will be run out of business after a consolidation of big drug wholesalers, have asked the Federal Trade Commission to block two mega-mergers in the industry.
In letters last month to the agency, the pharmacists allege that the mergers, involving the nation’s four largest wholesalers, would leave 80% of the nation’s market for prescription drugs in the hands of two giant companies.
Orange-based Bergen Brunswig is planning to merge with Cardinal Health of Ohio, and San Francisco-based McKesson Corp., the largest distributor of pharmaceuticals and medical products, is planning to buy AmeriSource Health Corp. of Pennsylvania.
The independents claim that the mergers would give greater market clout to companies that have been accused in numerous antitrust lawsuits of forcing retailers to pay inflated prices for wholesale drugs while favoring managed-care providers with low-ball prices.
The Pharmacy Planning Service, a Sausalito-based organization of 3,800 independent pharmacies, sent petitions urging the FTC to halt the mergers until there is proof that the combinations will help reduce drug costs to pharmacists and patients.
It also asked the agency to delay any decision until long-running price-fixing litigation against the industry is resolved--a delay that could prevent the mergers from proceeding for months, even years.
“We want the FTC to look over these mergers to be sure that this isn’t another case of the big getting bigger and gouging the public,” said Fred Mayer, the organization’s president.
The group supports multiple legal actions brought against drug makers and wholesalers in state and federal courts in recent years, most of which have been consolidated in federal court in Chicago.
The group’s members include corner druggists like Gary Dreyfus, who owns Moulton Plaza Pharmacy in Laguna Hills. Dreyfus said he worries about being shut out of pricing deals on drugs. He recalls discovering several years ago how a manufacturer was charging him nearly 15 times more for birth-control pills than it charged a big pharmacy with managed-care connections.
The agency wouldn’t comment on the group’s recent petitions.
In numerous lawsuits in federal district court in Chicago, thousands of retail pharmacies have accused drug wholesalers and manufacturers of conspiring since 1989 to fix prices. They also claim large as well as small retailers have paid high, anti-competitive prices for prescription drugs from manufacturers and wholesalers.
Defendants are a who’s who among the world’s giant drug makers. Wholesalers, including Bergen Brunswig, Cardinal Health, McKesson and AmeriSource, were originally named as defendants. They were removed, then added again after an appeal.
Defendants have denied all allegations in the complaints, but nine drug companies have agreed to pay $351 million to settle price-fixing claims.
A class-action lawsuit against those who haven’t settled is scheduled for jury trial next year.
Donald Roden, Bergen Brunswig’s chief executive, said he wouldn’t comment on the lawsuits, the FTC’s review of the mergers or the company’s pricing practices.
However, Roden said the proposed merger with Cardinal should enable the combined company to cut costs, improve efficiency, give more independent drugstores the ability to benefit from group purchasing and lower drug costs for the consumer.
