Lilly/PCS Purchase In Doubt

Eli Lilly has postponed its $4 billion purchase of McKesson's PCS subsidiary and has also intimated that the Federal Trade Commission might challenge the deal on antitrust grounds (see also Marketletter October 17). Restraint of trade is another possible problem in the purchase, others noted, and Lilly said at least two more weeks are needed for discussions with the agency.

Aides for at least three congressional committees that deal with antitrust and health care issues also plan to meet with the FTC to discuss the merger, the New York Times reported. A Lilly spokesman said the FTC discussions were progressing in an orderly manner, that the company feels it complies with the antitrust laws and the deal is in the best interests of the consumer.

Congressional aides have said the Commission's staff is concerned that Lilly, through PCS, could discriminate against other drugmakers by manipulating the drugs chosen by distributors to sell in volume to large employee health plans. The agency also has some new insights into the Merck & Co/Medco deal, they said, adding that the FTC has asked other drug companies, clients, trade groups and academics if competition would be hurt by the Lilly/PCS deal. Consumer advocacy groups and pharmacy trade groups have written to the Commission to express concern over these matters, and at least 50 civil lawsuits charging price discrimination have been filed against Merck and Medco. In total, nearly 30 of the world's leading drugmakers are being challenged over price discrimination.