Drug Distributors Likely to Fight FTC on Mergers

The nation’s biggest drug distributors served notice Wednesday that they are likely to fight a move by federal regulators to block two merger deals that would create a pair of corporate giants controlling much of the wholesale prescription drug market.

In court objections to the Federal Trade Commission’s action to block the mergers, the companies insisted that the mergers would help cut costs and would result in better service and lower prices for consumers.

The proposed deals would combine Orange-based Bergen Brunswig Corp. with Cardinal Health Inc., of Dublin, Ohio, and McKesson Corp. of San Francisco with AmeriSource Health Corp. of Malvern, Pa.

The companies sought Wednesday to portray themselves as middlemen whose profits have been badly squeezed by their suppliers--giant drug makers--and their customers, such as hospital networks and mass merchandisers.

“The wholesalers must respond or disappear,” Cardinal Health and Bergen Brunswig said in their filings.

Last week, the commission voted against the mergers, saying the deals would significantly reduce competition and trigger higher prices for consumers.

The agency moved to seek a preliminary injunction to halt the mergers while it prepares its legal case to block them permanently.

Though the FTC contends that the two corporations formed in the mergers would control more than 80% of the prescription drugs sold through wholesalers, the companies said they and other “full-line” wholesalers handle a little more than half the drugs distributed.

In addition, the wholesalers said they face stiff competition from smaller distribution outlets.

Bloomberg News contributed to this report.