Brooks Drug, Inc

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IN THE MATTER OF BROOKS DRUG, INC.

CONSENT ORDER, ETC. , IN REGARD TO Allged VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3256. Complaint ' July 1989-Deciiv, July, 1989 This consent order prohibits, among other things, the Pawtucket, RI. based corporation from entering into any agrement with other pharmacy firms to withdraw from or refuse to enter into any participation agrement. 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.

Appearanees For the Commission; Karen Bokat and Michael D. McNeely. For the respondent; Gayl W. Doster, in-house counsel Pawtucket R.I. and Neal R. Stoll, Skadden, Arps, Slater, Meagher Flam 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 settement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in .Complaint previously published at 112 FTC 15 (1989). Decision and Order such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereaftr considered the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that complaint should issue stating its charges 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 Brooks is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its offce and principal place of business at 75 Sabin Street, Pawtucket, Rhode Island.

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. Brooks means Brooks Drug, Inc., a Delaware corporation, its directors, offcers, 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 service administrative organizations; and health benefit programs for government employees, retirees or dependents;

C. Participation agreement" means any existing or proposed agreement, oral or written, in which a third-party payer agrees to , FEDERA TRADE COMMISSION DECISIONS Decision and Order 112 F.

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;

D. Pharmac firm means any partnership, sole proprietorship or corporation, including all of its subsidiaries, affliates, 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, affiliates, divisions and joint ventures, but excludes any partnership, sole proprietorship or corporation, including all of its subsidiaries, affliates, divisions and joint ventures, which own, are owned by, control or are under common control with Brooks. The words "subsidiary affliate", 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 Brooks, 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 Brooks with respect to entering into, refusing to enter into, threatening to refuse to enter into, participating in threatening to withdraw from, or withdrawing from any existing or proposed participation agreement into which Brooks 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 enterine- into. BROUKS VltUli. lnl.

Decision and Order refusing to enter into, participating in, or withdrawing from any existing or proposed participation agreement into which Brooks and the other pharmacy firm have entered, could enter or are considering entering.

Provided that nothing in this order shall prevent Brooks 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 jointly undertaking with pharmacy firms to provide prescription drug servces under a participation agreement if requested to do so in writing by the thirdparty payer;

(3) Communicating to the public truthful, nondeceptive statements concerning any existing or proposed participation agreement. In the event that Brooks is merged into or consolidated with its parent corporation, Hook-SupeRx, Inc., the provisions of Paragraph n.B. and C. shall only apply to activities related to or affecting participation agreements in New York, Massachusetts, Vermont, New Hampshire Rhode Island, Pennsylvania, Connecticut, Maine, New Jersey, and Maryland.

It is further ordered That Brooks:

A. Provide a copy of this order within thirty (30) days after the date this order becomes final to each officer, 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 Brooks' 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. FEDERA TRADE COMMISSION DECISIONS Decision and Order 112 F.

IV.

It is further ordered That Brooks:

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 Brooks, require, settng forth in detail the manner and form in which it has complied and is complying with this 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 Brooks or that come into Brooks' possession, custody, or control regardless of source, that embody, discuss or refer to the decision or upon which Brooks relies in deciding whether to enter into any participation agreement in which Brooks participates, has participat- , or has considered participating; and C. Notify the Commission at least thirty (30) days prior to any proposed change in Brooks 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. Provided however that with respect to the sale of a single subsidiary consisting of three or fewer retail locations, Brooks shall provide such advance notice as is practicable. Commissioners Azcuenaga and Machol dissenting. Complaint