Judge to reject Medco suit against drug retailers Rite Aid, Giant, others faced antitrust trial

Legal affairs

May 12, 1998|By William Patalon III | William Patalon III,SUN STAFF

A federal judge in Baltimore will dismiss an antitrust suit filed by Merck Medco Managed Care Inc. against Rite Aid Corp., Giant Food Inc. and other drug chains.

In a memo dated Friday, U.S. District Judge Benson E. Legg informed the parties of his intentions to save them the trouble of preparing for the trial, scheduled to begin May 26.

A formal order dismissing the case will be filed by the end of the month, he wrote in the memo. The suit claimed the drug chains had conspired in their refusal to participate in a prescription drug plan for 90,000 Maryland state employees and retirees that Medco was to have managed.

The contract, worth an estimated $266 million over four years, was to have taken effect Jan. 1, 1996. However, in late 1995, the state canceled the pact, stating that Medco did not have enough pharmacies participating.

The Camp Hill, Pa.-based Rite Aid Corp., Giant, NeighborCare Inc. and the EPIC network of independent pharmacies chains had declined to participate, saying they could not make money with the discounts Medco was demanding.

Medco blamed the four for its loss of the contract and charged that they had agreed among themselves not to participate. That would connote conspiracy and would be a violation of antitrust laws, Medco claimed, suing under a federal statute that could have allowed the Montvale, N.J., company to collect triple damages. However, specific damages were not cited in the lawsuit.

Rite Aid and the others said they reached their decisions independently. Legg apparently agreed.

"The evidence of conspiracy is too thin to support a jury verdict in Medco's favor," Legg wrote in his memorandum. "Accordingly, it is my intention to grant the defendants' motion for summary judgment on Medco's antitrust claims."

Summary judgment, rendered at the request of Rite Aid, means that the issue does not need to go to trial to be resolved. In his memo, the judge said he had heard enough during the four hearings held previously -- the last on April 30 -- to make his decision.

Medco spokesman Kevin Colgan said the company was "disappointed" by the judge's decision but said it would review his written opinion due later this month before deciding whether to appeal.

The Federal Trade Commission last summer dropped its investigation into whether the pharmacy chains violated antitrust rules when they refused to participate in the state prescription drug program.

Although the FTC did not comment directly on the investigation, it released a letter noting that the investigation was closed and stating that "upon further review of this matter, it now appears that no further action is warranted by the commission at this time."

Pub Date: 5/12/98

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