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Medco Deal Approval Should Have Conditions, Rivals’ Lawyer Says

Express Scripts Inc. (ESRX)’s bid for Medco Health Solutions Inc. (MHS) should be approved by U.S. antitrust regulators only if the combined company allows customers to buy specialty drugs at pharmacies that compete with their own, a lawyer for independent rivals said.

Express and Medco, pharmacy benefits managers that own their own stores, shouldn’t be allowed to charge more when their customers buy specialized treatments elsewhere, said David Balto, general counsel for the Independent Specialty Pharmacy Coalition, in a letter today to the Federal Trade Commission.

This is the first time the independent pharmacies, which would prefer the FTC to try to block the $29.1 billion deal in court, have suggested conditions for approval. The FTC is set to complete its investigation next month into whether the planned acquisition of Franklin Lakes, New Jersey-based Medco by Express Scripts would hurt competition.

Patients “will suffer from inferior service and higher prices,” Balto wrote in a letter to FTC Chairman Jon Leibowitz. The proposed conditions “would protect patient choice and prevent patient coercion, prohibiting exclusive specialty networks.”

Cecelia Prewett, an FTC spokeswoman, declined to comment.

A combined Express Scripts-Medco would be the biggest U.S. manager of prescription benefits and control more than half of the specialty pharmacy market, Balto said. Specialty pharmacies sell treatments for ailments such as cancer and HIV that often are injected or infused and usually require cooling or other special handling.

Brian Henry, a spokesman for St. Louis-based Express Scripts, declined to comment specifically on the letter.

“The FTC is taking a thorough look at the information” provided by the company, he said. “We continue to work with the FTC.”

The company believes the deal will receive the agency’s approval in the first half of this year, Henry said.

To contact the reporter on this story: Jeff Bliss in Washington at jbliss@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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