LEXIS-NEXIS® Congressional Universe-Document
LEXIS-NEXIS® Congressional
Copyright 1999
Federal News Service, Inc.
Federal News Service
JUNE 22, 1999, TUESDAY
SECTION: IN THE NEWS
LENGTH: 5186 words
HEADLINE: PREPARED TESTIMONY OF
STUART L. BASCOMB
VICE PRESIDENT OF EXPRESS SCRIPTS, INC.
BEFORE THE
HOUSE JUDICIARY COMMITTEE
SUBJECT - OPPOSING H.R. 1304
("QUALITY HEALTH-CARE COALITION ACT OF 1999")
BODY:
Stuart L. Bascomb
Express Scripts Testimony of Stuart L. Bascomb
I. Introduction.
My name is Stuart L. Bascomb. I am the Executive Vice President of Express
Scripts, Inc. I have been a senior executive at Express Scripts since 1986 and
am the company lead in sales. I play an active role in pharmacy network
development as well.
I have been extensively involved in the pharmaceutical industry for over 28
years, 18 years in retail and the last 10 years with Express Scripts, a
pharmacy benefit management company CPBM"). I am the past Chairman of the Board of the Pharmaceutical Care Management
Association. I also have been involved with the Chain Drug Industry's
Accounting Principles Committee and the Chain Drug Industry's Administration
and Operations Committee. Due to the depth of my experience
both in the provider and PBM sides, I feel that I am qualified to address the
impact that H.R. 1304 will have on the cost and availability of prescription
drug benefits.
Express Scripts is the nation's largest independent PBM. We currently provide
managed prescription drug services to more than 47 million individuals in the
United States and Canada. We provide better and more affordable drug therapy to
countless individuals every day.
PBMs are an important innovation in the health care market. PBMs contract with
plan sponsors to administer their members' prescription drug programs through a
network of pharmacies. Due to the administrative efficiencies that PBMs bring,
network pharmacies are able to offer discount pricing. Because these pharmacies
are linked on-line through sophisticated PBM computer systems, they are able to
monitor quality issues and resolve them quickly.
PBMs are important to consumers because they help to lower the price of
prescription drugs by negotiating discounts on prescription drugs with
pharmaceutical manufacturers and increasing the efficiency of pharmacy business
operations. PBMs also have helped to
increase patient access to drug benefits -including important breakthrough
drugs -- by making them more affordable to health care plans and their members.
This includes lowering the out-of-pocket costs patients are required to pay for
prescription drugs. And, PBMs have played an important role in assuring
patients that the pharmacies they deal with meet high quality standards by
requiring network pharmacies to be credentialled and audited.
However, H.R. 1304 threatens to undercut the ability of PBMs to provide lower
cost prescription drug benefits to consumers.I want to add that, on behalf of
myself and Express Scripts, we have a great deal of respect for the tremendous
role and value of community pharmacies in the health care system. In fact, a
recent report by Schering Laboratories found that, on average, patients'
approval rating of independent pharmacies is at
70%. 1/ This said, many pharmacists are independent business owners with their
own set of pressures. Given the opportunity to negotiate collectively to
increase their fees, such pharmacists will almost certainly do so instead of
forming productive and efficient joint ventures that benefit themselves as well
as their customers.
As a company that has been instrumental in lowering pharmaceutical costs for
employers and consumers, we are concerned that H.R. 1304 would undercut our
ability to fight rising health care costs and expand access to prescription
drugs for patients across the country. We urge members of this Committee to
reject this proposal because, if enacted, it will halt efforts by PBM companies
like ours to develop innovative strategies, many of which are in cooperation
with community pharmacies, to decrease total health care spending and improve
health outcomes. II. Background on Pharmaceutical Benefit Managers (PBMs).
PBMs manage the pharmacy
benefits of patients who are covered by health plan sponsors, whether through
an employer, union, insurance company or health maintenance organization ("HMO"). Pharmaceutical costs have increased dramatically over the last two decades
and currently are one of the fastest growing components of medical care. PBMs
manage both the quality of care and the costs of prescription drugs. Our cost
containment efforts include programs focused on reducing the costs of
administering the drug benefit and, where clinically appropriate, encouraging,
with physician approval, a more cost effective treatment. PBMs contract with
plan sponsors (those who pay for prescription drug benefits for their employees
or members) to perform a myriad of tasks, including:
- Contracting with community retail pharmacists to form a network of
participating providers;
- Administering sophisticated point of sale claims processing, concurrent drug
utilization review and
payment systems;
- Providing retrospective drug utilization review;
- Developing and managing drug formulaties;
- Negotiating discounts and rebates with pharmaceutical manufacturers;
- Extensive reporting to plan sponsors to assist in managing patient care and
program costs;
- Maintaining quality control; and
- Providing mail service pharmacy.
In addition, PBMs may work with plan sponsors to design drug benefits to
achieve objectives for a quality and cost effective benefit. This includes
determining how much of the cost of prescriptions employees will be asked to
pay, which drugs will be covered, whether mail service pharmacies will be used
and whether patients will be offered economic incentives to use equivalent
lower cost alternatives.
PBMs have been instrumental in lowering pharmaceutical cost trends for
employers and consumers. 2/ PBMs have been the driving force in automating the
claims processing, adjudication and payment
process, resulting in more efficient pharmacy and benefit administration. Over
90% of all third party prescription claims are now adjudicated on- line, saving
both time and money and significantly improving cash flow to the pharmacies. By
bringing third party plans to pharmacy networks, PBMs also have achieved
reductions in both pharmacy dispensing fees and actual drug ingredient costs
because of the volume of patients. The average pharmacy dispensing fee has
fallen 33% over the past ten years. Efforts by PBMs to negotiate drug
discounts from manufacturers in return for placing the manufacturer's drug on a
health plan's formulary also have reduced the cost of drug benefits.
All of these reductions ultimately have been passed on to the consumer in the
form of stable health insurance premiums and lower out-of-pocket pharmaceutical
costs, and for the plans,
lower administrative expenses. These same benefits are realized not only by
"private" health plans, but by the federal government in its prescription drug coverage
programs, such as the CHAMPUS, Veterans, Medicaid and the Federal Employee
Health Benefits Plan ("FEHBP") programs.
In achieving these cost-savings and efficiencies, PBMs also have helped improve
health care quality in several ways. First, they have enabled broad consumer
access to drug coverage, including the use of breakthrough pharmaceuticals. By
bringing down the cost of pharmacy benefits, PBMs have enabled more insurance
plans and employers to provide drug coverage. The number of those who have
access to drug insurance has risen significantly over the past few years. In
1986, 30% of all prescriptions dispensed at retail were third party payers. By
1998, over 68% were third party payers.
Consequently, drug therapy has become more affordable for people covered by our
services. Once high-priced out-of-reach drugs are now accessible for everyday
treatment. Many working people covered by our services would not be able to
afford the out-of-pocket cost of a 30- day supply of drugs. According to a
report to be published by Express Scripts this month, last year's annual per
patient cost -- on an average wholesale price basis before copayments,
discounts and active management -- was $329.48, up from $282.48 in 1997. New
drugs introduced since 1992 accounted for 35.6% ($117.55) of the 1998 pharmacy
benefit costs. A single prescription for a post-1992 new drug cost an average
of $72 in 1998.3/ The 1998 average copayment was
20% of the cost of the drug. This low out-of-pocket share makes drugs much more
accessible to Americans. Even if retrospectively reimbursed, many working
people and their families could not afford a 30-day supply of some common
drugs. For example, the average retail prescription price of a common
cholesterol lowering drug, is $100 month, or $1200 annually.
The more affordable drug benefit coverage, the more employers are able to
maintain and expand pharmacy benefits. Indeed, PBMs now are being considered as
a cost-effective way to provide Medicare patients with drug care benefits.4/
The selection of drugs available to consumers has increased as well. The result
has kept greater number of people well, thereby reducing overall health costs
and improving the quality of life for countless Americans.
Second, PBM-driven efficiencies have improved the quality of
drug therapy. The PBM-driven automation of pharmacies now allows the pharmacist
to be immediately notified if a newly prescribed medication conflicts with an
existing prescription dispensed at another pharmacy. The shared pharmacy
network that is managed by a PBM provides a fast and efficient way to identify
drugs that may be more appropriate to individual patients. It also provides a
means of identifying therapeutically equivalent or generic drug options for
consideration by the patient's physician.
Third, PBMs have helped improve the quality and accessibility of pharmacies.
Network pharmacies must be
"credentialled." Every pharmacy participating in a PBM or health plan network must meet
specific standards, including licensure, insurance and quality assurance
requirements. Moreover, by creating a network, PBMs offer health plan payers a
number of geographically
accessible pharmacies. A patient can go into any network pharmacy and expect
the same out-of-pocket charge for the drug. In fact, most of the members that
we serve access networks that constitute 95% of the available pharmacies. In a
sense, the network levels the playing field for independent pharmacies, chains
and discounters. The patient pays the same copayment no matter which pharmacy
he or she uses. These consumer advantages rebound to the pharmacists' benefit
by bringing them more third party payer customers. In short, contracted
networks are a win-win for all involved.
III. Pharmacists Have Boycotted and Fixed Prices in Past Efforts to Raise Fees
and Reduce Consumer Choices.
While consumers have benefited from the cost savings produced by PBMs and other
managed care organizations, some pharmacists have resisted attempts by such
organizations to
reduce pharmacy costs and implement other steps to make drugs and pharmacy
services more efficient and affordable. In certain instances, pharmacists have
boycotted PBM plans and attempted to fix prices in an effort to raise their
fees. This has resulted in reduced consumer choice and higher prices for
employers, government programs and consumers. Examples of such efforts include
the following:
- In December 1998, the Asociacion de Farmacias Region de Arecibo CAFRA"), an association of approximately 125 pharmacies operating in northern Puerto
Rico, and one of AFRA's officers, agreed to settle FTC charges that they had
fixed prices and engaged in an illegal boycott in an effort to obtain higher
reimbursement rates for pharmacy goods and services under Puerto Rico's
government managed care plan for indigents.5/ AFRA's
boycott enabled the pharmacists to increase reimbursement rates by 22%.
- In May 1998, five institutional pharmacies in Oregon agreed to settle FTC
charges that they unlawfully fixed prices, leading to higher reimbursement
levels for servicing Medicaid patients in Oregon long-term care institutions.
6/ These five pharmacies, negotiating jointly through the Institutional
Pharmacy Network ("IPN"'), together provide pharmacy service for approximately 80% of the patients who
receive institutional pharmacy services in Oregon. By engaging in collective
negotiations over price and terms and agreeing to fix the fees they charged,
the pharmacies were successful in raising reimbursement levels. As a result,
three managed care plans with which IPN negotiated paid IPN members a higher
rate than they paid to other institutional pharmacies.
- In 1994, the
FTC obtained a consent decree against the Baltimore Metropolitan Pharmaceutical
Association, Inc. ("BMPA") and the Maryland Pharmacists Association ("MPhA") for file gaily conspiring to boycott the prescription drug plan for Baltimore
city government employees./7 In order to coerce higher reimbursement rates for
prescriptions in response to cost-containment measures initiated by the
Baltimore city government, BMPA, MPhA and some of its members exhorted
pharmacists that operated within Baltimore to stop participating in the plan
and coordinate their joint activities. These actions increased the cost of
obtaining drugs through prescription drug plans and reduced price competition
between the firms providing these prescriptions, ultimately harming Baltimore
consumers.
- In 1992-93, the Southeast Colorado Pharmacal Association ("SCPhA"), which consists of approximately 19 of the 22 pharmacies located in seven
counties in southeastern Colorado, conspired to boycott a prescription drug
program offered to state retirees. In an effort to force the program to
increase its reimbursement rate for prescriptions, SCPhA members refused to
fill prescriptions under the plan and placed notices in local newspapers
announcing their refusal./8 This conspiracy increased the prices consumers paid
to pharmacies for prescriptions filled under third-party benefit plans.
- In the late 1980's, various retail druggists in New York participated in a
conspiracy to boycott the New York State Employees Prescription Program,
successfully forcing an increase in reimbursement rates for pharmacies filling
prescriptions for public employees. This conspiracy cost the state of New York
approximately $7 million over an 18 month period and
defeated a cost-containment initiative which would have reduced the
reimbursement amounts paid to pharmacies when they filled prescriptions for
some 500,000 state employees and retirees./9
Most pharmacies work within existing laws to advance the quality care of their
patients. However, in all the above instances, pharmacists acted against the
interests of consumers in an effort to increase their profits. 10/ Fortunately,
the
antitrust laws provided a means to halt this conduct. However, H.R. 1304 would eliminate
this safety mechanism, resulting in higher prices for federal government plans,
private plans and all of the plan participants, employees, retirees and
dependents these plans serve.
IV. The MeCarran-Ferguson Act Does Not
Exempt Insurers from
Antitrust Oversight/Regulation in their Dealings with Pharmacists.
Some proponents of H.R. 1304 have suggested that the legislation is necessary
to provide a counter-weight to the McCarran-Ferguson Act. This is untrue. The McCarran-Ferguson Act does not provide an
antitrust exemption to health plans in their dealings with pharmacists. Agreements among
insurers or PBMs regarding contracts with individual pharmacists remain subject
to
antitrust scrutiny, as do mergers among PBMs or health plans.
The McCarran-Ferguson Act deals with the business of insurance, i.e., the
underwriting and spreading of risk. It does not provide a blanket
antitrust exemption that covers all activities of insurers. Indeed, dealings between
insurers and pharmacists generally are outside of the McCarran-Ferguson
antitrust exemption.
Two instances of judicial review of agreements between insurers and pharmacies
and/or pharmacists regarding drug reimbursements provide excellent examples of
how insurers are not protected from
antitrust scrutiny by the McCarran-Ferguson Act in their dealings with pharmacists. The
first example is found in Group Life
& Health Insurance
Co. v. Royal Drug Co. 11/, a Supreme Court case addressing allegations by
owners of independent pharmacies that Blue Shield of Texas had violated the
Sherman Act by entering into prescription reimbursement agreements with certain
pharmacies. Specifically, the independent pharmacists alleged that Blue
Shield's Pharmacy Agreement, under which a participating pharmacy agreed to
furnish prescription drugs to Blue Shield's policy holders for $2 a
prescription and Blue Shield agreed to reimburse the pharmacy for the
pharmacy's cost of acquiring the amount of drug prescribed, was an agreement to
fix prices. Policy holders patronizing pharmacies that did not participate in
the Pharmacy Agreement were reimbursed at 75%. According to the independent
pharmacists, this caused Blue Shield's policyholders not to deal with certain
of the non-participating pharmacists, thereby constituting an unlawful group
boycott as well.
In its defense, Blue Shield claimed that its conduct came within the
McCarran-Ferguson Act and therefore was exempted from
antitrust scrutiny. The Supreme Court disagreed, noting that the exemption applied to
the business of insurance, not to the business of insurers. The Court observed
that,
"The primary elements of an insurance contract are the spreading and
underwriting of a policyholder's risk." 12/ The disputed Pharmacy Agreements did not involve the underwriting or
spreading of risk, but were merely arrangements for the purchase of goods and
services by Blue Shield.
"There is not the slightest suggestion in the legislative history that Congress
in any way contemplated that arrangements such as the Pharmacy Agreements in
this case, which involve the mass purchase of goods and services from entities
outside the insurance industry, are the business of insurance."13/
Portland Retail Druggists Ass'n v. Kaiser Foundation Health Plan, l4/ provides
another example of insurer conduct toward
pharmacists that was subject to the
antitrust laws. Several retail pharmacies and non- profit trade associations to which
some of the pharmacies belonged brought separate
antitrust actions against HMOs alleging, among other things, that the contractual
arrangements by which the organizations acquired drugs from manufacturers,
wholesalers and distributors violated the
antitrust laws. The HMOs claimed an
antitrust exemption under the McCarran-Ferguson Act. The appellate court disagreed,
holding that these arrangements did not constitute the business of insurance
and, consequently, did not fall within the McCarran-Ferguson exemption.
The retail pharmacists also alleged that Kaiser had attempted to monopolize the
business of drug sales by coercing drug companies, wholesalers and distributors
to grant Kaiser prices lower than those otherwise available to retail
pharmacies, in violation of Section 2 of the Sherman Act. They further alleged
that Kaiser had resold drugs they had obtained at prices less than those that
could have been charged
by the retail pharmacists, thus inflicting injury on the retail pharmacists.
The appellate court allowed these allegations to stand, thus again subjecting
HMO conduct toward pharmacists to
antitrust scrutiny.
V. Pharmacists Can Form Networks and Collaborate Under the
Antitrust Laws.
Pharmacists have more than enough flexibility under the
antitrust laws to adapt to a rapidly changing marketplace by forming alliances, joint
ventures, networks and other collaborative activity without the protection of
H.R. 1304. In fact, Express Scripts contracts with no fewer than eight such
pharmacist joint ventures, which include over 7,000 pharmacies. In addition,
Express Scripts is active in the National Health Information Network ("NHIN'), a coalition comprised of most major pharmacy chains and independent
software vendors, on Y2K compliance for pharmacies.
In 1996, the Department of Justice and the
Federal Trade Commission ("FTC") issued the most recent version of their statements of enforcement policy and
analytical principles relating to health care and
antitrust.15/ These principles are designed to guide all health care providers, including
pharmacists, regarding ways they can engage in collaborative activity
consistent with the
antitrust laws. As outlined by these Health Care Statements, pharmacists can engage in a
wide-range of activity without
antitrust risk. These include:
- Information Sharing: The Health Care Statements provide a
"safety zone" that allows pharmacists to exchange price and cost information under certain
conditions. 16/ Moreover, the
antitrust enforcers will not challenge information exchanges even if they do not come
within these safety zones if the procompetitive justifications for the
exchanges outweigh any anticompetitive effects.
- Joint Purchasing Arrangements: The
antitrust enforcers
recognize the procompetitive efficiencies of joint purchasing arrangements. 17/
Consequently, independent pharmacists can collaborate in purchasing
arrangements that allow them to obtain significant discounts from
pharmaceutical manufacturers. - Network Arrangements: The Health Care
Statements also recognize that pharmacist networks serve a procompetitive
purpose by enabling independent pharmacy owners to develop efficiencies in
furnishing pharmaceutical items and services to PBMs and third party payers.18/
Two recent FTC advisory opinions illustrate the latitude pharmacists currently
have in forming collaborative arrangements. One example is the establishment of
the Orange Pharmacy Equitable Network ("OPEN"'), which received a favorable FTC Advisory Opinion on May 19, 1999. OPEN's
intention is to create a network linking drug prescribing, dispensing and
patient education/disease management services in a structure in which
prescribing
doctors, the dispensing pharmacies and the disease management pharmacists would share
common economic incentives to work together to manage drug therapy in the
interest of reducing overall medical costs.19/
OPEN's product would be provided under a single contract to be negotiated and
executed by OPEN on behalf of its members. Pharmacies would be paid for drug
dispensing and compliance monitoring services and pharmacists would be paid for
disease management services. A withhold from the payment for drug product
dispensing would be placed in a risk pool, along with the savings realized in
budgeted expenses for drugs and in expected medical costs, and the funds within
the pool would be shared between OPEN and the physician group according to an
agreed formula. OPEN's share would be distributed to pharmacies and pharmacists
based on the number of value units accrued for billed services and the
number of prescriptions filled. All OPEN members would be eligible to
participate in the network and there would be no restriction on the ability of
pharmacies to participate in other networks.
The FTC staff concluded that this proposal did not raise significant
antitrust risks and would not be challenged if implemented as described. The advisory
opinion noted that the structure of OPEN appears to foster integration among
pharmacies, pharmacists and prescribing physicians in a cooperative effort to
assure the most appropriate and cost-effective drug treatment. It observed:
"This type of arrangement appears to offer a potential for achieving significant
efficiencies, both in terms of more cost-effective management of pharmaceutical
and medical benefits and in terms of improving the quality of pharmaceutical
therapy provided to patients." 20/
The OPEN network resembles another innovative collaborative arrangement among
pharmacists set up by the New
Jersey Pharmacists Association ("NJPA") in 1997, which also was approved by the FTC staff 21/ NJPA intended to
establish two pharmacist service networks to offer health education and
monitoring services to diabetes and asthma patients. In providing these
educational services, participating pharmacists would, among other things, meet
with patients and assess their condition, review their medication history and
set objectives for disease management, including modification of patient
habits. These services would not involve dispensing medication and may be
provided in the patient's home. As outlined to the FTC, NJPA intended to
market these services to insurance companies, HMOs, managed care organizations,
pharmacy benefit managers and other third party payers. NJPA would negotiate
the fees for such services with third party payers, allowing payers to agree to
capitated fees or, alternatively, negotiate a shared risk reward compensation
plan in which the pharmacies share in cost savings achieved in treating high
risk patients. If costs were lower for an identified group of patients than
they were during a defined baseline period, the pharmacies would receive a part
of the money saved as compensation.
The FTC approved the proposed networks and noted the procompetitive benefits of
the arrangements.
The ventures proposed by NJPA did not involve agreement on drug prices, just
the price of patient education services, and consequently created no greater
opportunity for collusion on the sale of prescription drugs than did the
perfectly lawful existence of the NJPA itself. In addition, the FTC noted the
significant competition to NJPA's proposed networks arising from
doctors, registered nurses and dietitians, physician assistants and competing networks.
Both of these proposed networks were reviewed and approved under the existing
antitrust laws, without the exemption
outlined in H.R. 1304. They illustrate how pharmacists currently have a wide
variety of options in structuring their dealings with each other and with
health plans. They also demonstrate that the
antitrust laws do not prohibit pharmacist collaboration that has the potential to
benefit consumers; rather they are aimed at cartel behavior, such as that which
would be exempted under H.R. 1304. Express Scripts' existing arrangements with
collaborative groups of pharmacists reflect the fact that the existing legal
structure permits activities which benefit pharmacists and their patients.
Indeed, Express Scripts competes with other PBMs for the business of these
networks. Any attempt by a single PBM or plan to unreasonably decrease the rate
paid to pharmacists below a competitive level results in pharmacies declining
to participate, thereby denying the PBM the necessary access to pharmacies it
needs to be competitive with other PBMs. Pharmacists, even in today's
competitive
market, retain reasonable profit margins - approximately 20- 28%; H.R. 1304
would provide an opportunity for pharmacists to increase these margins even
further, without providing any assurances that patients would be better served.
V. H.R. 1304 Would Only Raise Prices and Reduce Access, Not Benefit Consumers.
H.R. 1304 is unnecessary and unwise. Existing laws allow pharmacies and
pharmacists to work together in ways that are procompetitive and efficient.
Passage of this bill would result in increased pharmaceutical costs and reduced
quality of drug therapy, severely injuring American consumers. We strongly urge
that Congress reject this bill and continue to allow PBMs to develop efficient
and innovative ways to decrease health care costs.
FOOTNOTES:
1/ Schering Laboratories, Schering Report XXI, America's Pharmacist (June
1999).
2/ See Experiences of Health Maintenance Organizations with
Pharmacy Benefit Management Companies, HHS OIG Report, April 1997 (stating that
HMOs report that the biggest benefit of using PBMs is their ability to help
control prescription costs).
3/ Express Scripts Drug Trend Report, June 1999.
4/ Legislation has been proposed advocating PBM involvement in Medicare drug
benefits as a way to provide prescription drug coverage to fee-for-service
Medicare enrollees.
5/ In re Asociacion de Farmacias Region de Arecibo, (Network Inc., No. C-3855
(March 2, 1999) (WL, FATR FTC)).
6/ In re Institutional Pharmacy, (Network Inc., No. C-3822 (August 11, 1998)
(WL, FATR FTC)).
7/ In re Baltimore Metropolitan Pharmaceutical Ass'n, Inc. (WL, FATR- FTC), 117
F.T.C. 95 (1994).
8/ In re Southeast Colorado Pharmacal Ass'n, 116 F.T.C. 51 (1993).
9/ In re Chain Pharmacy Ass'n of New York State, Inc., 114 F.T.C. 327 (1991).
10/ The FTC also obtained a consent decree against RxCare of Tennessee in 1996
for implementing a most-favored nation ("MFN") clause that required members of RxCare that accepted a reimbursement rate
lower than the RxCare rate to demand the lower reimbursement rate for all its
RxCare business. In re RxCare of Tennessee, Inc. 121 F.T.C. 762 (1996). Because
RxCare's business constituted such a large percentage of the pharmacies'
third-party business, the clause made it very expensive for pharmacies to
discount their reimbursement rates to other payers. Consequently, they rarely
did so. In effect, this MFN clause
created a price floor for pharmaceutical reimbursements in Tennessee.
11/ 440 U.S. 205 (1979).
12/ Id. at 211.
13/ Id. at 224 (citations omitted).
14/ 662 F. 2d 641 (9th Cir. 1981).
15/ Statements of
Antitrust Enforcement Policy in Health Care, 4 Trade Reg. Rep. (CCH) 13,153 (August 28,
1996) ("Health Care Statements").
16/ Absent extraordinary circumstances, the
antitrust authorities will not challenge such an information exchange if the exchange is
managed by a third party; the information provided is based on data more than
three months old; and there are at least five providers of information of which
no one provider's data accounts for more than 25% on a weighted basis and the
data is aggregated such that it would not
allow participants to identify prices. Id. at 20,811, Health Care Statement
6(A).
17/ Absent extraordinary circumstances, the
antitrust agencies will not challenge any joint purchasing arrangement in which
"the purchases account for less than 35% of the total sales of the purchased
product or service in the relevant market" and in which the cost of the jointly purchased item
"accounts for less than 20% of the total revenues from all products or services
sold by each competing participant in the joint purchasing arrangement." Id. at 20,812, Health Care Statement 7(A).
18/ According to the Health Care Statements,
"multiprovider networks will be evaluated under the rule of reason, and will not
be viewed as per se illegal, if the providers' integration through the network
is likely to produce significant efficiencies that benefit consumers, and any
price
agreements (or other agreements that would otherwise be illegal) by the network
providers are reasonably necessary to realize these efficiencies." Id. at 20, 826, Health Care Statement 9(A).
19/ Orange Pharmacy Equitable Network, FTC Advisory Opinion, (May 19, 1999).
(http://www.ftc.govfoc/adops/operadop.htm).
20/ Id. at 5.
21/ New Jersey Pharmacists Ass'n, FTC Advisory Opinion (Aug. 12, 1997).
http://www.ftc.gov/os/1997/9708/newjerad.htm).
END
LOAD-DATE: June 23, 1999