Three US lawmakers urge close look at Medco deal

* Lawmakers fear merged company would dominate

* Express Scripts confident of approval, working with FTC

WASHINGTON, Sept 9 (Reuters) - Three lawmakers asked U.S. antitrust enforcers to give Express Scripts' (ESRX.O) plan to buy rival Medco Health Solutions MHS.N "close scrutiny" because it would create a company twice as large as its nearest competitor.

Representatives Henry Waxman, Frank Pallone and Diana DeGette, all Democrats, asked the Federal Trade Commission on Friday to take a hard look at the deal, saying they were concerned that the merged company would dominate the pharmacy benefits manager business.

Pharmacy benefit managers, or PBMs, oversee drug benefit programs for health insurers and employers.

Medco agreed to the cash and stock deal in July, worth about $26.6 billion based on Friday afternoon trading.

The lawmakers also expressed concern about the merged company's dominance of the market for expensive specialty drugs, such as those used to treat Crohn's Disease, hepatitis C, infertility and many cancers.

"The market for prescription drugs, which involves often opaque interactions between insurance companies, pharmaceutical manufacturers, pharmacies, and PBMs, is complex and rapidly changing, and the impacts of this merger could be significant," the lawmakers wrote in the letter to FTC Chairman Jon Leibowitz.

"We are therefore asking that you carefully examine the impacts on healthcare cost and access as a result of the proposed Express Scripts-Medco merger," they said.

The deal would combine two of the three largest U.S. drug benefit managers and create an industry leader that holds about one-third of the market, leading some investors to remain skeptical that U.S. antitrust regulators will approve it.

A spokesman for Express Scripts said that the company remained confident that the deal would be approved and would close in the first half of 2012. "We have been and we continue to work collaboratively with the FTC staff," said spokesman Brian Henry.

The FTC has already asked for additional information on the deal. [ID:nN1E7811PG]

The lawmakers said Medco was losing large contracts with Blue Cross Blue Shield and United Health Care next year, which could resolve some concerns.

Share prices of Express Scripts were down 5 percent on Friday afternoon to $43.53 while Medco was down 4.3 percent at $51.13, underperforming the broader market where the S&P 500 index was down 3 percent. (Reporting by Diane Bartz; Editing by Tim Dobbyn)