FTC Sues to Bock Omnicare's Takeover of PharMerica

The Federal Trade Commission (FTC) has sued to block Omnicare, Inc.'s hostile acquisition of rival long-term care pharmacy provider PharMerica Corporation, alleging that the combination of the two largest U.S. long-term care pharmacies would harm competition and enable Omnicare to raise the price of drugs for Medicare Part D consumers and others.

In its complaint, the FTC charges that a deal combining Omnicare and PharMerica would significantly increase Omnicare's already substantial bargaining leverage by dramatically increasing the number of nursing homes  that receive long-term care pharmacy services from the company.

Due to its substantial market share, the FTC alleges, the combined firm likely would be a "must have" for Medicare Part D prescription drug plans, which are responsible for providing subsidized prescription drug benefit coverage for most nursing home residents and other Medicare beneficiaries.

According to the Centers for Medicare & Medicaid Services (CMS) of the Department of Health and Human Services, the proposed acquisition "appears likely to result in higher reimbursement rates . . . and thereby to increase the cost to CMS (and therefore the U.S. government and U.S. taxpayers) as well as any individuals who pay out-of-pocket costs in connection with such services."

Foot the bill

"If Omnicare is allowed to purchase its biggest and only national competitor, it will diminish competition and raise health care costs – leaving taxpayers and patients to foot the bill," said Richard Feinstein, Director of the FTC's Bureau of Competition. "The Bureau will continue to be vigilant in our efforts to prevent these sorts of anticompetitive deals."

The FTC's administrative complaint is part of the agency's ongoing efforts to maintain competition in the U.S. health care sector, which benefits consumers by keeping prices low and quality and choice of products and services high.

This year, more than 1.6 million Part D Medicare beneficiaries are expected to require long-term care while living in a nursing home, and about 1.1 billion prescriptions per year are processed under Part D on behalf of approximately 29 million beneficiaries.