Reuters: Regulatory News: UPDATE 1-Express Scripts judge won't derail Medco merger

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UPDATE 1-Express Scripts judge won't derail Medco merger Apr 25th 2012, 16:17 Wed Apr 25, 2012 12:17pm EDT * Judge refuses to order Medco be divested, cites harm * Separating Medco would create "headless" company--judge * Judge to rule later on Express Scripts bid to dismiss case By Jonathan Stempel April 25 (Reuters) - A federal judge rejected on Wednesday a request by pharmacy trade groups to derail Express Scripts Inc's efforts to integrate rival Medco Health Solutions Inc following its recent $29.1 billion takeover. U.S. District Judge Cathy Bissoon in Pittsburgh declined to issue a preliminary injunction to force Express Scripts to divest Medco or keep it separate. She said she will not decide whether to issue a permanent injunction until after ruling on Express Scripts' request to dismiss the case entirely. "An order holding separate Medco from Express Scripts ... would result in a headless organization that would likely be unable to survive on its own, much less compete against Express Scripts," Bissoon wrote. "This, ironically, is exactly the harm that plaintiffs seek to prevent." Bissoon also said the plaintiffs did not show how a brief delay in divesting Medco would cause them "immediate" and "irreparable" harm. Plaintiffs including the National Association of Chain Drug Stores, the National Community Pharmacists Association and several independent pharmacies had argued that the merger violated antitrust law by reducing competition, and would lead to less consumer choice and higher prescription drug prices. The March 29 lawsuit was filed four days before Express Scripts said it completed the merger, after having won approval from a divided Federal Trade Commission. Express Scripts spokesman Brian Henry said the company is pleased with the decision. Lawyers for the plaintiffs did not immediately respond to requests for comment. The trade groups had sought a court order to keep Medco's assets separate until their claims could be addressed, or else require that Express Scripts divest more assets than it planned. Express Scripts countered that the plaintiffs waited an inexcusably long eight months after the merger was announced to sue. It also said that halting the integration would cause uncertainty and perhaps cost business. The merger combined two of the three largest U.S. pharmacy benefits managers. It more than doubled Express Scripts' revenue base and put the St. Louis-based company well ahead of rival CVS Caremark Corp in processing prescriptions. In early afternoon trading, Express Scripts shares rose 10 cents to $57.32 on the Nasdaq. The case is National Association of Chain Drug Stores et al v. Express Scripts Inc et al, U.S. District Court, Western District of Pennsylvania, No. 12-00395. Link this Share this Digg this Email Reprints

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