WASHINGTON (Reuters)—Express Scripts Inc.’s planned buy of Medco Health Solutions Inc. met with swift opposition from consumer advocates and drug stores, signaling the beginning of what could be an ugly fight for antitrust approval.

The $29.1 billion deal would create a powerhouse in managing prescription drug benefits. Its only other real competitor would be CVS Caremark Corp., at No. 2, and possibly UnitedHealth Group.

“This is an area where there is already tremendous concentration,” said Sharon Treat, executive director of the National Legislative Assn. on Prescription Drug Prices. “If you look at who has all the (pharmacy benefits ) contracts, it’s going to be concentrated on the Big 3 which would now be the Big 2.”

Ms. Treat believes the combination will raise prices for consumers at the drugstore due to the lack of competition.

Antitrust regulators tend to look skeptically at deals which reduce the number of competitors in an industry from four to three, and take an even harder look at deals that reduce the number of competitors to two.

Community pharmacy groups were already consulting with the Federal Trade Commission and state prosecutors on their next steps in opposing the deal, the National Community Pharmacists Assn. and National Assn. of Chain Drug Stores said in a joint statement.

“The major (pharmacy benefits managers) already wield an unchecked, one-sided advantage in setting contract and reimbursement terms for community pharmacists, undermining their viability to continue serving patients,” said Douglas Hoey, NCPA head, in an emailed statement. “Approval of this merger would further distort this marketplace, to the detriment of patients, true competition and lower prices,” he said.

Like merging Visa, Mastercard?

The review itself will take considerably longer than the four months that the FTC took to approve pharmacy giant CVS’s purchase of Caremark, which closed in 2007, said an antitrust expert who asked not to be named.

Antitrust regulators could well take a hard look at how many options big companies have when they look for a pharmacy benefits contractor, said this expert.

“The question is how many alternatives do large companies have?” this person asked. “When a large company goes out to bid its (drug) plan, how many options do they have?”

The FTC is already investigating CVS Caremark after allegations that it has used its pharmacy benefits business to steer customers to CVS pharmacies rather than allowing customers to go where they choose.

The three companies’—CVS, Express and Medco—share of the large-plan market could well be 80%, said David Balto, a former FTC policy director now in private practice.

“This is terrible for consumers. This is like Visa and MasterCard merging,” he said.

Analysts said approval was a gamble, while noting that sophisticated corporations only rarely announce major deals that they cannot shepherd through to approval.

“The companies I’m sure have investigated this and they think that they have a decent shot of it, although it’s notable that there’s no financial penalties in the deal if it doesn’t get approved by regulators,” said Morningstar analyst Matthew Coffina. “They’re just making a bet at this point that regulators will go along with it.”