The trial on the Federal Trade Commission's motion to block the pair of mergers that would create two mammoth drug distributors shifted to the defense last week.
San Francisco-based McKesson Corp. seeks to buy AmeriSource, based in Malvern, Pa. for about $3.3 billion. Dublin, Ohio-based Cardinal Health has bid about $4.2 billion for Bergen Brunswig Corp., based in Orange, Calif. The resulting companies would control about 80% of the market for wholesale distribution of drugs, according to the FTC, which is seeking a preliminary injunction against the deals.
A trial on the FTC's motion for an injunction to block the deals is ongoing in federal district court in Washington. It started earlier this month.
Last week McKesson Chief Executive Officer Mark Pulido testified for the defense. He said that drug wholesalers have to combine in order to compete because customers have formed powerful buying blocs and because of relentless cost-cutting pressure by managed care, according to Bloomberg Financial News.
Earlier in the trial Carl Shapiro, an economist at the University of California-Berkeley and the FTC's key expert witness, said the mergers would lessen competition and particularly hurt hospitals and small pharmacies, which don't have their own warehouses.
A Kaiser Permanente executive, Dale Kramer, also testified that reduced drug wholesaling competition would mean higher drug prices for Kaiser, particularly in California.
The trial is expected to conclude next month.