Krahulec, James E

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IN THE MATTER OF JAMES E. KRAHULEC COKSENT ORDER , ETG. , IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE CO IMISSION ACT Docket 9227. Complaint '" April 1.98.9-Decision, July, 1991 This consent order prohibits, among other things, Mr. Krahulec from organizing or entering into any agreement with any pharmacy firms to boycott, withdraw from or refuse to enter into a third-party payer prescription drug plan; for ten years from organizing, sponsoring, or attending a meeting of pharmacy firms at which persons make any statements concerning the pharmacy firm s intent to enter into or refuse to enter into any third-party payer prescription drug plan; for ten years from communicating to any pharmacy firm, other than Mr. Krahulec s employer any information concerning any pharmacy firm s intention 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 thirdparty payer prescription drug plan.

Appearances For the Commission: Karen G. Bokat and Michael D. McNeely. For the respondent: William J. Guzick, Slcadden, A rps, Slate Meagher Flam Washington, D.

DF;CISION AND ORDER The Commission having heretofore issued its complaint charging the respondent James E. Krahulec 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, his 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 settement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such Cor. plaint p:cv:ou.'-dy p' :)lished ut 114 FTC 327 1991) IES E. KRAHCLEC 373 372 Decision and Order complaint, and waivers and other provisions as required by the Commission s Rules; and The Secretary of the Commission having thereafter withdrawn this matter from adjudication in accordance with Section 25(c) of its Rules; and The Commission having considered the matter and having thereupon accepted the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 Krahulec is an individual employed by Rite Aid Corporation in Rite Aid Corporation s principal offices at Railroad Ave. and Trindle Road, Shiremantown, Pennsylvania. 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. Mr. Krahulec means James E. Krahulec, his agents and employees;

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 , 374 FEDERAL TRADE COM;\IISSIOX DECISIONS Decision and Order 114 F. from the third-party payer for such prescriptions dispensed during the term of the agreement;

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. 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 Mr. Krahulec, directly, indirectly, or through any device, in or in connection with his 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, organizing, sponsoring, facilitating, or attending a formal or informal meeting of representatives of pharmacy firms that Mr. Krahulec expects or reasonably should expect wil facilitate communications, or continuing to conduct a formal or informal meeting of representatives of pharmacy firms at which two persons make any statement, concerning one or more firms' intentions or decisions 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; C. For a period of ten (10) years after the date this order becomes final, communicating in any way to or soliciting from any pharmacy firm other than ~r. Krahulec s employer any information concerning any pharmacy firm s intention or decision with respect to entering JAMES E. KRAHULEC 375 372 Decision and Order into, threatening to refuse to enter into, refusing to enter into participating in, threatening to withdraw from, or withdrawing from any existing or proposed participation agreement; and D. For a period of eight (8) years after the date this order becomes final, advising any pharmacist not employed by Mr. Krahulec employer or any pharmacy firm other than Mr. Krahulec s employer with respect to entering into, refusing to enter into, participating in or withdrawing from any existing or proposed participation agreement into which Mr. Krahulec s employer and the other pharmacy firm have entered, could enter or are considering entering. Provided that nothing in this order shall prevent Mr. Krahulec 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; or (2) Communicating to the public truthful, nondeceptive statements concerning any existing or proposed participation agreement. It is further ordered That Mr. Krahulec: A. Shall 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 Mr. Krahulec, require, setting forth in detail the manner and form in which he has complied and is complying with this order;

B. For a period of five (5) years after the date this order hecomes final, maintain and make available to Commission staff for inspection and copying upon reasonable notice, records adequate to describe in detail any action taken in connection with the activities covered by Part II of the order, including, but not limited to, all documents generated by Mr. Krahulec or that come into his possession, custody, or control regardless of source, that embody, discuss or refer to the terms or conditions of any participation agreement; and C. Notify the Commission within thirty (30) days of any change in Mr. Krahulec s employer or of any other change that may affect compliance with the order.

Commissioner Azcuenaga dissenting.

376 FEDERAL TRADE COM)IISSION DECISIOXS Complaint 114 F.