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FTC ANTITRUST COMPLAINT AGAINST SIX NEW YORK PHARMACEUTICAL ASSOCIATIONS

Executive Summary

FTC ANTITRUST COMPLAINT AGAINST SIX NEW YORK PHARMACEUTICAL ASSOCIATIONS and one individual on April 10 charges that the defendants agreed to boycott the New York State Employees Prescription Plan, the Federal Trade Commission said in a same-day release. The boycott allegedly was designed "to force [the state] to raise reimbursements to pharmacies," FTC said. The commission's complaint asserts that the boycotts cost the state $7 mil. in the 18 months following July 1, 1986, when the plan began. Defendants include the Empire State Pharmaceutical Society, Capital Area Pharmaceutical Society and Alan Kadish, former president of the Pharmaceutical Society of the State of New York (PSSNY). Three other associations -- Long Island Pharmaceutical Society, Pharmaceutical Society of Orange County and Westchester County Pharmaceutical Society -- and PSSNY signed consent agreements to settle the charges. The action is the latest in a series of charges brought against several New York pharmacy chains and associations for anticompetitive activities. A year ago, eight retail chain pharmacies, one trade association and one individual were charged with conspiring to boycott the state prescription drug reimbursement plan ("The Pink Sheet" T&G-11, May 1, 1989). FTC said it "has accepted consent agreements settling the charges against three of the pharmacy chains." Hearings against the remaining seven parties are scheduled for July. In the most recent charges, FTC said, the pharmacy associations agreed "through statements at meetings and other exchanges of information" not to participate in the plan at the proposed reimbursement levels. The New York state insurance plan offered different reimbursement rates to pharmacies in an effort to cut costs. The associations' activities "have unreasonably restrained competition among pharmacists and pharmacies in New York and have injured consumers in three ways: reducing price competition; coercing the state into raising the prices paid to pharmacies under the Employees Prescription Plan; and forcing the state to pay substantial additional sums for prescription drugs under the plan," according to the agency. Under the consent agreements, the four associations agreed not to engage in a number activities which the FTC considers anticompetitive. They vowed not to 1) agree to refuse to enter into any participation agreement; 2) continue a meeting if two parties make statements concerning one or more firms' intentions to withdraw from any participation agreement; 3) communicate to another pharmacist information concerning any other pharmacy's intentions with respect to a participation agreement; and 4) comment to any pharmacist on the desirability or appropriateness of a participation agreement. The consent agreements are for settlement purposes only and are not an admission to violating the law.
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