Call For A Special Independent Board Committee To Protect Shareholders
WASHINGTON, Aug. 13 /PRNewswire-USNewswire/ -- The International Brotherhood of Teamsters urged PharMerica Corporation (NYSE: PMC) shareholders to call for a special committee of independent directors to oversee related party transactions at the company.
The Teamsters cited extensive business ties with former parents AmerisourceBergen Corporation (NYSE: ABC) and Kindred Healthcare, Inc. (NYSE: KND) as causes for concern, and warned that PharMerica's prime vendor agreement with AmerisourceBergen could create operational dependence on the troubled former parent, putting shareholders' interests at risk.
Under the agreement, PharMerica is required to purchase 95 percent of its pharmaceutical products from AmerisourceBergen, and a minimum $1 billion volume from the former parent in the first year after closing. This ostensibly "arms-length agreement" could create dependence on AmerisourceBergen, which has run into considerable legal and reputational problems in recent years.
"[AmerisourceBergen's] troubled record raises serious questions regarding the future of PharMerica's business," wrote C. Thomas Keegel, Teamster General Secretary-Treasurer, in the letter to investors. "Despite the importance of this key sourcing relationship, PharMerica's board has failed to explain how it determined that a long-term vendor agreement with its former parent company is in shareholders' best interest, or whether it explored, or plans to explore, other sourcing options."
The letter details AmerisourceBergen's troubles, which include settled lawsuits over the distribution of allegedly counterfeit and recycled drugs, an investigation by the FBI over an allegedly illegal rebate scheme, the reported disappearance of controlled pharmaceuticals from its distribution centers in a number of states, and most recently a suspended license at its distribution center in Orlando over allegedly ineffective controls against diversion.
Though three current AmerisourceBergen and Kindred Healthcare executives have announced that they will leave PharMerica's board in 2008, Keegel noted that "the need for independent oversight at PharMerica in its first year is critical" to prevent conflicts of interests on the board.
Formed from the July 2007 merger of AmerisourceBergen and Kindred Healthcare's institutional pharmacy businesses, PharMerica is a pharmaceutical services company that serves patients in hospital and long-term care settings.
The Teamsters Union represents workers at several AmerisourceBergen distribution centers in the U.S.
A copy of the letter can be viewed online:
SOURCE International Brotherhood of Teamsters