Genovese Drug Stores, Inc

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IN THE MATTER OF GENOVESE DRUG STORES, INC.

CONSENT ORDER, ETC. , IN REGARD TO ALGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3258. Complaint ' July 1989-Decision, July, 1989 This consent order prohibits, among other things, the Melvile, N.Y. based corporation from entering into any agreement with other pharmacy firms to withdraw from or refuse to enter into any participation agreement. It further prohibits respondent, for a period of ten years, from communicating to another pharmacy firm their decision or intention to enter or refuse to enter into such a participation agreement. In addition, for eight years, it prohibits respondent from advising another pharmacy firm on whether to enter into any participation agreement. Appearances For the Commission: Karen Bokat and Michael D. McNeely. For the respondent: Edward J. Brady, Brady Tarpey, New York City.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of the complaint which the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order an admission by the respondent of all jurisdictional facts set forth in the aforesaid draft complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and "Complaint previously published at 112 FTC 15 (1989). Decision and Order 112 F.

having determined that it had reason to believe that the respondent has violated the said Act, and that complaint should issue stating its argues in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2. 34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent Genovese is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business at 80 Marcus Drive, Melville, N.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER For purposes of the order, the following definitions shall apply: A. Genovese means Genovese Drug Stores, Inc. , its directors officers, agents, employees, divisions, subsidiaries, successors and assigns;

B. Third-party payer means any person or entity that provides a program or plan pursuant to which such a person or entity agrees to pay for prescriptions dispensed by pharmacies to individuals described in such plan or program as eligible for such coverage ("Covered Persons ), and includes, but is not limited to, health insurance companies; prepaid hospital, medical, or other health service plans such as Blue Cross and Blue Shield plans; health maintenance organizations; preferred provider organizations; prescription servce administrative organizations; and health benefit programs for government employees, retirees or dependents;

C. Particpation agreement" means any existing or proposed agreement, oral or written, in which a third-party payer agrees to reimburse a pharmacy for the dispensing of prescription drugs to Covered Persons, and the pharmacy agrees to accept such payment from the third-party payer for such prescriptions dispensed during the term of the agreement;

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Decision and Order D. Pharmac firm means any partnership, sole proprietorship or corporation, including all of its subsidiaries, affiliates, divisions and joint ventures, that owns, controls or operates one or more pharmacies, including the directors, officers, employees, and agents of such partnership, sole proprietorship or corporation as well as the directors officers, employees, and agents of such partnership, sole proprietorship s or corporation s subsidiaries, affliates, divisions and joint ventures, but excludes any partnership, sole proprietorship or corporation, including all of its subsidiaries, affiliates, divisions and joint ventures, which own, are owned by, control or are under common control with Genovese. The words "subsidiary affiliate", and "joint venture" refer to any firm in which there is partial (10% or more) or total ownership or control between corporations. II.

It is ordered That Genovese, directly, indirectly, or through any corporate or other device, in or in connection with its activities in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act, shall forthwith cease and desist from: A. Agreeing or combining, attempting to agree or combine, or taking any action in furtherance of any agreement or combination advocating an agreement, or organizing or cooperating with any Pharmacy Firm(s) to (1) boycott, refuse to enter into, withdraw from or not participate in, any Participation Agreement or (2) threaten to boycott, threaten to refuse to enter into, threaten to withdraw from or threaten not to participate in, any participation agreement; B. For a period of ten (10) years after the date this order becomes final, stating or communicating in any way to any pharmacy firm the intention or decision of Genovese with respect to entering into refusing to enter into, threatening to refuse to enter into, participating , threatening to withdraw from, or withdrawing from any existing or proposed participation agreement into which Genovese and the other pharmacy firm have entered, could enter or are considering entering;

C. For a period of eight (8) years after the date this order becomes final, advising any pharmacy firm with respect to entering into refusing to enter into, participating in, or withdrawing from any existing or proposed participation agreement into which Genovese and FEDERA TRADE COMMISSION DECISIONS Decision and Order 112 F.

the other pharmacy firm have entered, could enter or are considering entering.

Pr01ded that nothing in this order shall prevent Genovese from: (1) Exercising rights permitted under the First Amendment to the United States Constitution to petition any federal or state government executive agency or legislative body concerning legislation, rules or procedures, or to participate in any federal or state administrative or judicial proceeding;

(2) Subcontracting, preparing joint bids, or otherwise jointly undertaking with pharmacy firms to provide prescription drug services under a participation agreement if requested to do so in writing by the third-party payer;

(3) Communicating to the public truthful, nondeceptive statements concerning any existing or proposed participation agreement. It is further ordered That Genovese:

A. Provide a copy of this order within thirty (30) days after the date this order becomes final to each offcer, director, employee pharmacist who is employed in New York state, and each employee whose responsibilities include recommending or deciding whether to enter into any participation agreement, and each employee who regularly attends meetings on Genovese s behalf that include representatives of other pharmacies; and B. For a period of five (5) years after the date this order becomes final, provide each new director and each employee who enters a position described in Paragraph A a copy of the order within ten (10) days of the date the employee or director assumes the new position. IV.

It is further ordered That Genovese:

A. File a verified, written report with the Commission within ninety (90) days after the date this order becomes final, and annually thereafter for five (5) years on the anniversary of the date this order becomes final, and at such other times as the Commission may, by written notice to Genovese, require, setting forth in detail the manner and form in which it has complied and is complvine: with this order: Decision and Order B. For a period of five (5) years after the date this order becomes final, maintain and make available to Commission staff for inspection and copying upon reasonable notice all documents generated by Genovese or that come into Genovese s possession, custody, or control regardless of source, that embody, discuss or refer to the decision or upon which Genovese relies in deciding whether to enter into any participation agreement in which Genovese participates, has participated, or has considered participating; and C. Notify the Commission at least thirty (30) days prior to any proposed change in Genovese such as, assignment or sale resulting in the emergence of a successor corporation or association, change of name, change of address, dissolution, the creation, sale or dissolution of a subsidiary, or any other change that may affect compliance with this order.

Commissioners Azcuenaga and Machol dissenting. FEDERA TRADE COMMISSION DECISIONS Decision and Order 112 F.