Merck OKs Fire Wall

Article excerpt

A California lawsuit challenging the merger of Merck & Co. and Medco Containment Services Inc. has been o to trial, requires Merck-Medco to establish an independent pharmacy and therapeutics committee and prohibits the company from establishing a Merck-only formulary. Terms of the settlement also prohibit Medco from passing product pricing data to Merck marketing and advertising groups.

Merck-Medco said the settlement will have little material impact on operations. "The consent order is largely consistent with the way Merck and Medco businesses are currently being conducted," said spokesman Kevin Colgan. "It will allow Merck and Medco to continue to deliver high-quality healthcare products to their clients, consistent with cost-containment goals."

Steven Bacon, owner of Lawson-Dyer Pharmacy in Mill Valley, just north of San Francisco, is more concerned with what the manufacturer/pharmacy benefit manager won't be doing as a result of the settlement. Bacon filed suit in Federal District Court in 1993 to block the merger. He was worried that the two companies would close formularies to non-Merck products and use Medco's advance knowledge of other manufacturer's contract price bids to dominate the drug market.

"Trying to block the merger may have been asking for a lot," Bacon said, "but we have an injunction against Merck-only formularies, and we have a fire wall to keep price competition alive. This was a victory for independent pharmacy. …