Fay'S Incorporated

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IK THE MATTER OF FAY' S INCORPORATED CO:-SE:-T ORDER, ETC. , IK REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSIOK ACT Docket .9227. CO'nplaint* , April 1989-Decision, June, 1991 This eonsent order prohibits, among other things, a pharmaceutical firm from organizing or entering into any agreement among pharmacy firms to withdraw from or refuse to enter into a third-party payer prescription drug plan; for ten years, from stating or communicating to any pharmacy firm the intent to enter into or refuse to enter into any third-party payer prescription drug plan; and for eight years, from providing comments or advice to any pharmacist or pharmacy firm on the desirability or appropriateness of entering into or refusing to enter into any third-party payer prescription drug plan. Appearances For the Commission: Karen G. Bolcat and Michael D. McNeeley. For the respondent: Pa"l J. Curtin, Jr. , Law OjJIees of C. Daniel Shulman Syracuse, N.

DECISIO'\ AKD ORDER The commission having heretofore issued its complaint charging the respondent Fay s Drug Company, Inc. with a violation of Section 5 of the Federal Trade Commission Act, as amended, and the respondent having been served with a copy of that complaint, together with a notice of the contemplated relief; 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 the jurisdictional facts set forth in the complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent 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and other provisions as required by the Commission s Rules; and The Secretary of the Commission having thereafter withdrawn this *Order an (nr.:'Jg cO:l;Jla:'J t to rcrlcct challgcd :12me of :.c:;pondcn'" is:;L;Cd August 17 . 1990 (113 FTC 762) COrJlplil::lt vev;oL;s:y published at 114 prc :-127 FAY' S IKCORPORATED 345 344 Decision and Order matter from adjudication in accordance with Section 3.25(c) of its Rules; and The Commission having considered the matter and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of (60) days, now in further conformity with the procedure prescribed in Section 3.25(f) of its rules, the Commission hereby makes the following jurisdictional findings and enters the following order:

1. Respondent Fay s Incorporated is a corporation organized existing and doing business under and by virtue of the laws of the State of New York, with its office and principal place of business located at 7245 Henry Clay Boulevard, Liverpool, :\ew York. 2. The Federal Trade Commission has jurisdiction of thc subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDI:R For purposes of the order, the following definitions shall apply: A. Fay means Fay s Incorporated, 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 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 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;

, 346 FEDERAL TRADE COMMISSIO:\ DECISIO:\S Dccision and Order 114 F. D. Pharmacy 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, affiliates, 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 Fay s. 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 Fay, 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 Fay s 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 Fay s 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 Fay s and the other pharmacy firm have entered, could enter or are considering entering.

FA Y' S INCORPORATED 347 344 Decision and Order Provided that nothing in this order shall prevent Fay s 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; or (3) Communicating to the public truthful, nondeceptive statements concerning any existing or proposed participati()n agreement. II.

It is further ordered That Fay 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 Fay ' 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 ':8 further ordered That Fay 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 Fay, require, setting 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 348 FEDERAL TRADE CmnIISSION DECISIOKS Decision and Order 114 F. and copying upon reasonable notice all documents generated by Fay or that come into Fay s possession, custody, or control regardless of source, that embody, discuss or refer to the decision or upon which Fay s relies in deciding whether to enter into any participation agreement in which Fay s participates, has participated, or has considered participating; and C. Notify the Commission at least thirty (30) days prior to any proposed change in Fay s 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.

Commissioner Azcuenaga dissenting.

CANANDAIGUA WINE C02\PANY 349 349 Complaint