FTC Staff Comment Says New York Bill to Regulate Pharmacy Benefit Managers May Increase Pharmaceutical Prices for New York Consumers; Commission Approves Final Consent Order in Matter of Dow Chemical Company and Rohm & Haas Company

FTC Staff Comment Says New York Bill to Regulate Pharmacy Benefit Managers May Increase Pharmaceutical Prices for New York Consumers

– Federal Trade Commission staff filed a comment stating that provisions of New York State Senate Bill 58 would likely have the unintended consequence of increasing prices that New York consumers and health plans pay for prescription drugs. As a result, the bill may also decrease the number of New York citizens with insurance coverage for such drugs, the comment states. The FTC’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics submitted the joint comment in response to State Senator James L. Seward’s request.

Health plans often contract with pharmacy benefit managers, which administer the plans’ prescription drug benefits. Portions of the New York bill would mandate that the pharmacy benefit manager make certain disclosures relating to the cost of its services, its contracts with manufacturers, and actual and potential conflicts of interest. The bill would also impose certain types of contractual relationships between pharmacy benefit managers and health plans. The bill appears to try to prevent possible conflicts of interest that a pharmacy benefit manager could have in managing the drug benefit program for a health plan.

The FTC staff comment explains that these requirements may not help health plans protect their interests, and health plans may not want them. The requirements, however, will limit the ability of health plans and pharmacy benefit managers to reach cost-effective relationships. In turn, those increased costs likely will raise the cost of prescription drug coverage.

At the same time, the comment explains that the bill is unlikely to have an offsetting benefit because the perceived problems it seeks to address are not widespread. Further, a 2005 Commission study found that health plans can and do negotiate protections from potential conflicts of interest that a pharmacy benefit manager might have.

The Commission vote authorizing the filing of the comment with State Senator Seward was 4-0. A copy of the comments can be found on the FTC’s Web site and as a link to this press release. (FTC File No. V090006; the staff contact is Daniel J. Gilman, Office of Policy Planning, 202-326-3136.)

Commission Approves Final Consent Order in Matter of Dow Chemical Company and Rohm & Haas Company

– Following a public comment period, the Commission has approved a final consent order in the matter of Dow Chemical Company and Rohm & Haas Company, and the staff has sent letters to the commenters of record. The vote approving the final order was 4-0. (FTC File No. 081-0214; the staff contact is Michael A. Franchak, Bureau of Competition, 202-326-2406; see press release dated January 23, 2009, at http://www.ftc.gov/opa/2009/01/dow.shtm.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, NW, Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 16.2009.wpd)