WASHINGTON (Reuters) - Antitrust regulators moved on Friday to block Omnicare’s $441 million bid to buy rival PharMerica Corp, saying the combination would harm competition and allow Omnicare to raise the price of drugs for the frailest of the elderly.
Omnicare and PharMerica are the top two companies in the long-term pharmacy services sector, which provide drugs and other goods to nursing homes, assisted-living centers, and other long-term care facilities, the Federal Trade Commission said.
“If Omnicare is allowed to purchase its biggest and only national competitor, it will diminish competition and raise health care costs - leaving taxpayers and patients to foot the bill,” Richard Feinstein, director of the FTC’s Bureau of Competition, said in a statement.
The Centers for Medicare & Medicaid Services, that oversees the government’s health plans for the poor and elderly, had weighed in against the merger.
“The bureau will continue to be vigilant in our efforts to prevent these sorts of anticompetitive deals,” Feinstein added.
The FTC is still reviewing a much bigger deal: Express Scripts Inc planned buy of Medco Health Solutions Inc.
That $29 billion deal, announced in July, would combine two of the three U.S. pharmacy benefit managers that are large enough to manage prescription drug benefits for nationwide companies.
Robert Doyle of Doyle, Barlow and Mazard PLLC said that investors viewed both cases through the same prism but added: “One case doesn’t have anything to do with another. I don’t believe the two are related.”
Bert Foer, head of the American Antitrust Institute, said the FTC could litigate both cases, if it decided it needed to.
“My feeling is that if they think have a good case in the Medco/Express Scripts it wouldn’t make a difference,” he said.
Omnicare went hostile with its $15 a share offer for PharMerica in September.
Omnicare has about 45 percent of the market for delivering prescription medicines to people in long-term care, while PharMerica has about 15 percent, according a source with long experience in the industry.
Omnicare said in a statement on its website that it strongly disagreed with the FTC. “The institutional pharmacy business is competitive and Omnicare is confident it would remain so after the transaction,” the company said.
The two companies have 250 pharmacies nationwide, according to the trade group Long Term Care Pharmacy Alliance.
The FTC filed an administrative complaint to stop the deal. An administrative law judge at the FTC will now evaluate it. If the companies lose in that venue, they can appeal in the regular court system.
Reporting By Diane Bartz; Editing by Gary Hill and Tim Dobbyn