Judge Pushes Plan for Bergen Brunswig Merger

A federal judge in Washington pressed for a settlement Tuesday that would allow the nation’s four largest wholesale drug distributors to combine into two companies.

The proposal by U.S. District Judge Stanley Sporkin, however, drew negative comments from lawyers for both the companies and the Federal Trade Commission, which is challenging the combinations. Lawyers previously indicated that a settlement is unlikely.

Cardinal Health Inc. wants to acquire Orange-based Bergen Brunswig Corp. for $4.5 billion, and McKesson Corp. seeks to buy AmeriSource Health Corp. for $3.5 billion. The FTC says the acquisitions would lead to higher prices and reduced service.

Sporkin urged the parties to consider a plan in which Cardinal and McKesson would sponsor new competitors in at least some parts of the country. Under the judge’s proposal, the large wholesalers would pay the new entrants’ costs for as long as three years.

Sporkin’s suggestions at least initially drew opposition from FTC lawyer Michael Antalics. The government litigator said it wouldn’t be enough for the companies to sell their abandoned warehouses to potential rivals because that would still leave Cardinal and McKesson with their all-important customer bases.

Cardinal lawyer Thomas Cullen compared the idea of giving up customers to slavery, adding, “We can’t deed over our customers.”