Cooperativa de Farmacias Puertorriquenas; Analysis of Agreement Containing Consent Order to Aid Public Comment, 51801-51804 [2012-20955]

Download as PDF Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Notices Dated: August 22, 2012. Robert E. Feldman, Executive Secretary. [FR Doc. 2012–20986 Filed 8–24–12; 8:45 am] BILLING CODE 6714–01–P FEDERAL MARITIME COMMISSION Controlled Carriers Under the Shipping Act of 1984 August 22, 2012. Federal Maritime Commission. Notice. AGENCY: ACTION: The Federal Maritime Commission is publishing an updated list of controlled carriers, i.e., ocean common carriers operating in U.S.foreign trades that are owned or controlled by foreign governments. Such carriers are subject to special regulatory oversight by the Commission under the Shipping Act of 1984. FOR FURTHER INFORMATION CONTACT: Rebecca A. Fenneman, General Counsel, Federal Maritime Commission, 800 North Capitol Street NW., Washington, DC 20573, (202) 523–5740. SUPPLEMENTARY INFORMATION: The Federal Maritime Commission is publishing an updated list of controlled carriers. Section 3(8) of the Shipping Act of 1984 (46 U.S.C. 40102(8)), defines a ‘‘controlled carrier’’ as: An ocean common carrier that is, or whose operating assets are, directly or indirectly, owned or controlled by a government, with ownership or control by a government being deemed to exist for a carrier if— (A) A majority of the interest in the carrier is owned or controlled in any manner by that government, an agency of that government, or a public or private person controlled by that government; or (B) That government has the right to appoint or disapprove the appointment of a majority of the directors, the chief operating officer, or the chief executive officer of the carrier. As required by the Shipping Act, controlled carriers are subject to special oversight by the Commission. Section 9(a) of the Shipping Act (46 U.S.C. 40701(b)), states: The Federal Maritime Commission, at any time after notice and opportunity for a hearing, may prohibit the publication or use of a rate, charge, classification, rule, or regulation that a controlled carrier has failed to demonstrate is just and reasonable. Congress enacted these protections to ensure that controlled carries, whose marketplace decision-making can be pmangrum on DSK3VPTVN1PROD with NOTICES SUMMARY: VerDate Mar<15>2010 15:04 Aug 24, 2012 Jkt 226001 influenced by foreign governmental priorities or by their access to nonmarket sources of capital, do not engage in unreasonable below-market pricing practices which could disrupt trade or harm privately-owned shipping companies. The controlled carrier list is not a comprehensive list of foreign-owned or -controlled ships or ship owners; rather, it is only a list of ocean common carriers that are controlled by governments. See 46 U.S.C. 40102(8). Thus, tramp operators and other non-common carriers are not included, nor are nonvessel-operating common carriers, regardless of their ownership or control. Since the last publication of this list on May 10, 2005 (70 FR 24581), the Commission has newly classified one ocean common carrier as a controlled carrier, Hainan P O Shipping Co., Ltd. (‘‘P O Shipping’’), and removed four common carriers from the controlled carrier list: Ceylon Shipping Corporation (‘‘Ceylon’’); Compagnie Nationale Algerienne de Navigation (‘‘CNAN’’); Sinotrans Container Lines Co., Ltd. (d/b/a Sinolines) (‘‘Sinotrans’’); and The Shipping Corporation of India Ltd. (‘‘SCI’’). Pursuant to 46 CFR 501.23, P O Shipping was classified as a controlled carrier on July 23, 2010. As part of a general review of common carriers subject to regulation by the Commission, Ceylon was determined to be inactive as of March 20, 2012. See 76 FR 70448; FMC Docket No. 11–20 Publication of Inaccurate or Inactive Ocean Common Carrier Tariffs. CNAN has also been removed from the list, as it no longer operates as an ocean common carrier. All CNAN tariffs in U.S.-foreign trades were cancelled effective February 24, 2011. Sinotrans is being removed from the list, as it no longer operates as an ocean common carrier in the U.S.-foreign trades, although a related company operates as a non-vessel-operating common carriers (‘‘NVOCC’’) in the U.S.-foreign trades. SCI is also being removed from the list as it no longer does business in the U.S.-foreign trades. All SCI tariffs in U.S.-foreign trades were cancelled effective February 21, 2011. China Shipping Container Lines Co., Ltd. and China Shipping Container Lines (Hong Kong) Company, Ltd. are now a single organization (RPI No. 019270). It is requested that any other information regarding possible omissions or inaccuracies in this list be provided to the Commission’s Office of General Counsel. See 46 CFR 501.23. The amended list of currently classified PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 51801 controlled carriers and their corresponding Commission-issued Registered Persons Index numbers is set forth below: (1) American President Lines, Ltd and APL Co., Pte. (RPI No. 000240)— Republic of Singapore; (2) COSCO Container Lines Company, Limited (RPI No. 015614)—People’s Republic of China; (3) China Shipping Container Lines Co., Ltd and China Shipping Container Lines (Hong Kong) Co., Limited (RPI No. 019270)—People’s Republic of China; (4) Hainan P O Shipping Co., Ltd. (RPI No. 022860)—People’s Republic of China. Karen V. Gregory, Secretary. [FR Doc. 2012–21009 Filed 8–24–12; 8:45 am] BILLING CODE P FEDERAL TRADE COMMISSION [File No. 101 0079] Cooperativa de Farmacias Puertorriquenas; Analysis of Agreement Containing Consent Order to Aid Public Comment Federal Trade Commission. Proposed Consent Agreement. AGENCY: ACTION: The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices or unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order—embodied in the consent agreement—that would settle these allegations. SUMMARY: Comments must be received on or before September 20, 2012. ADDRESSES: Interested parties may file a comment online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Write ‘‘Coopharma, File No. 101 0079’’ on your comment, and file your comment online at https://ftcpublic. commentworks.com/ftc/ coopharmaconsentument, by following the instructions on the web-based form. If you prefer to file your comment on paper, mail or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Room H–113 (Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580. FOR FURTHER INFORMATION CONTACT: Randall Marks (202–326–2571), FTC, DATES: E:\FR\FM\27AUN1.SGM 27AUN1 pmangrum on DSK3VPTVN1PROD with NOTICES 51802 Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Notices Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580. SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and § 2.34 the Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing a consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for August 21, 2012), on the World Wide Web, at https://www.ftc.gov/ os/actions.shtm. A paper copy can be obtained from the FTC Public Reference Room, Room 130–H, 600 Pennsylvania Avenue NW., Washington, DC 20580, either in person or by calling (202) 326– 2222. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before September 20, 2012. Write ‘‘Coopharma, File No. 101 0079’’ on your comment. Your comment— including your name and your state— will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at https://www.ftc.gov/os/ publiccomments.shtm. As a matter of discretion, the Commission tries to remove individuals’ home contact information from comments before placing them on the Commission Web site. Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone’s Social Security number, date of birth, driver’s license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any ‘‘[t]rade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential,’’ as provided in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). VerDate Mar<15>2010 15:04 Aug 24, 2012 Jkt 226001 In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).1 Your comment will be kept confidential only if the FTC General Counsel, in his or her sole discretion, grants your request in accordance with the law and the public interest. Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at https:// ftcpublic.commentworks.com/ftc/ coopharmaconsentument by following the instructions on the web-based form. If this Notice appears at https://www. regulations.gov/#!home, you also may file a comment through that Web site. If you file your comment on paper, write ‘‘Coopharma, File No. 101 0079’’ on your comment and on the envelope, and mail or deliver it to the following address: Federal Trade Commission, Office of the Secretary, Room H–113 (Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your paper comment to the Commission by courier or overnight service. Visit the Commission Web site at https://www.ftc.gov to read this Notice and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before September 20, 2012. You can find more information, including routine uses permitted by the Privacy Act, in the Commission’s privacy policy, at https://www.ftc.gov/ftc/privacy.htm. Analysis of Agreement Containing Consent Order To Aid Public Comment The Federal Trade Commission has accepted, subject to final approval, an agreement containing a proposed consent order with Cooperativa de 1 In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c), 16 CFR 4.9(c). PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 ˜ Farmacias Puertorriquenas (‘‘Coopharma’’ or ‘‘Respondent’’). The agreement settles charges that Coopharma violated Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45, by negotiating, entering into, and implementing agreements among its member pharmacy owners to fix the prices on which they contract with third-party payers in Puerto Rico. The proposed consent order has been placed on the public record for 30 days to receive comments from interested persons. Comments received during this period will become part of the public record. After 30 days, the Commission will review the agreement and the comments received, and will decide whether it should withdraw from the agreement or make the proposed consent order final. The purpose of this analysis is to facilitate public comment on the proposed consent order. The analysis is not intended to constitute an official interpretation of the agreement and proposed consent order, or to modify their terms in any way. Further, the proposed consent order has been entered into for settlement purposes only and does not constitute an admission by Respondent that it violated the law or that the facts alleged in the proposed complaint (other than jurisdictional facts) are true. The Proposed Complaint Coopharma is a not-for-profit corporation organized and doing business as a cooperative under the laws of Puerto Rico. Coopharma consists of approximately 300 pharmacy owners who own roughly 360 community pharmacies in Puerto Rico. Coopharma members control at least a third of the pharmacies in Puerto Rico and the organization has a particularly strong presence on the western side of the main island. Coopharma was established with the principal purpose of negotiating on behalf of its members and entering into single-signature ‘‘master contracts’’ with payers that bind all Coopharma pharmacies. The proposed complaint alleges that Coopharma members negotiated collectively through Coopharma to obtain higher reimbursement rates than its members were receiving in their individual contracts with payers, including pharmacy benefits managers and insurers. The proposed complaint alleges that Coopharma’s member pharmacies restrained competition by jointly negotiating and entering into agreements with third-party payers. E:\FR\FM\27AUN1.SGM 27AUN1 Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Notices pmangrum on DSK3VPTVN1PROD with NOTICES Coopharma achieved this result by encouraging its members: (1) To refuse to deal with third-party payers except through Coopharma; and (2) to threaten termination, or actually terminate, contracts with payers that refused to deal with Coopharma on the terms it demanded. Coopharma collectively negotiated reimbursement rates with more than ten payers and has reached agreements on behalf of its members with seven of them. The mere threat of Coopharma members’ collective action led two additional payers to pay higher rates. The proposed complaint alleges that Coopharma’s actions caused payers to pay higher reimbursement rates to Coopharma members, and that this price increase ultimately may be passed along to consumers in the form of higher premium payments, diminished service, or reduced coverage. As a result, Coopharma’s actions caused substantial harm to the consumers of Puerto Rico. Coopharma’s conduct was unrelated to any efficiency-enhancing integration among its members. Negotiations With CVS-Caremark As a specific example of Coopharma’s misconduct, the proposed complaint alleges that CVS-Caremark (‘‘Caremark’’), a pharmacy benefits manager operating in Puerto Rico, was forced to rescind a rate cut and to enter into a master contract at a higher rate because of the collective action of Coopharma members. In 2008, Caremark notified pharmacies throughout the country that it was reducing reimbursement on its Medicare Part D contracts. Coopharma mobilized its members to collectively resist that rate change. Coopharma provided its members with a form letter, which many sent, rejecting the new Medicare Part D contracts and telling Caremark to negotiate rates through Coopharma. Coopharma then informed Caremark that its members would not accept Caremark’s reimbursement offer and demanded higher rates. Coopharma also informed certain Caremark clients that Caremark was threatening to terminate pharmacies that did not accept Caremark’s rate change. This pressure led Caremark to rescind the Part D rate change for the pharmacies that sent letters rejecting the change. Coopharma continued to pressure Caremark to enter into a master contract on all lines of business, including Medicare Part D. Coopharma used the same basic tactics to accomplish this goal, by: (1) Demanding that Caremark negotiate exclusively through Coopharma; (2) threatening that its members would terminate their VerDate Mar<15>2010 15:04 Aug 24, 2012 Jkt 226001 Caremark contracts; and (3) contacting Caremark’s clients. Indeed, Coopharma took the matter public by placing a newspaper advertisement stating that negotiations with Caremark had failed and that, as of May 28, 2009, ‘‘we will not continue providing services’’ to Caremark patients. In August 2009, Caremark agreed to replace Coopharma’s members’ individual contracts with a master contract with Coopharma. The proposed complaint alleges that Caremark’s price concessions cost it approximately $640,000 in 2009 alone. Other Coercive Conduct In addition, the proposed complaint alleges that in at least two instances, the mere threat of collective terminations benefitted individual Coopharma pharmacies at a cost of millions of dollars to third-party payers. Coopharma pharmacies obtained higher reimbursement rates from third-party payers Medco and Medicare Mucho Mas even though negotiations with Coopharma did not result in a master contract. During its negotiations with Medco, Coopharma threatened to pull all Coopharma pharmacies out of Medco’s network. In an attempt to prevent such a disruption of its network, Medco raised the reimbursement rates it paid to individual Coopharma pharmacies, a concession that cost Medco and its clients over $2 million between 2007 and 2011. Medicare Mucho Mas, a large Medicare Advantage payer, also feared that Coopharma could cause a similar disruption in its pharmacy network. As a result, Medicare Mucho Mas’ pharmacy benefits manager offered a higher reimbursement rate to Coopharma pharmacies. Finally, the proposed complaint alleges that Coopharma attempted to use collective action to resist a reimbursement rate reduction by health insurer Humana. Coopharma attempted to coerce Humana into maintaining its reimbursement rates by threatening termination of the individual contracts and pressuring it into entering into a master contract. When Humana asserted that Coopharma lacked the legal authority to terminate its members’ contracts, Coopharma encouraged its members to terminate their contracts individually. Coopharma Cannot Qualify for State Action Immunity The proposed complaint alleges that Coopharma’s anticompetitive conduct cannot be shielded by the state action doctrine. The state action doctrine provides that states are not subject to PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 51803 federal antitrust liability, and that by extension certain subordinate state entities and private parties exercising state-granted powers may be immunized as well.2 Private parties claiming the protection of this immunity must meet two elements. First, private parties must demonstrate that the challenged conduct was undertaken pursuant to a clearly articulated state policy to displace competition with regulation. Second, private parties must show that the challenged conduct has been actively supervised by the state.3 The proposed complaint alleges that neither requirement is satisfied here. Puerto Rico has not clearly articulated a policy to replace competition with the challenged conduct. Law 203 regulates ‘‘collective bargaining’’ between providers of health care services, including pharmacies, on the one hand, and payers, on the other.4 However, Law 203 limits collective bargaining to situations where the providers obtain a certificate verifying that they constitute less than 20 percent of providers in a particular area, do not engage in boycotts, submit to mandatory arbitration in the case of an impasse, and comply with certain other requirements.5 Coopharma has not— and cannot—satisfy these requirements.6 The proposed complaint also alleges that Puerto Rico has not actively supervised Coopharma’s conduct because no Puerto Rican official has exercised the power to review, approve, or disapprove either the rates in Coopharma’s contracts with payers or the coercive collective action it used to obtain them.7 Under Law 203, Coopharma has neither sought to comply with nor satisfied any of the law’s requirements. Even under Law 239, the Puerto Rico agency charged with the general regulation of cooperatives, the Corporacion para la Supervision y Seguro de Cooperativas 2 See, e.g., Parker v. Brown, 317 U.S. 341 (1943). Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980). 4 26 L.P.R.A. § 3101, et seq. 5 E.g., 26 L.P.R.A. §§ 31.040; 31.050; 31.060. 6 The Commission is aware that Law 239, which regulates cooperatives generally, declared that cooperatives ‘‘shall not be considered conspiracies or cartels to restrict business.’’ 5 L.P.R.A. § 4516 (Law 239, § 20.5). The Commission and the Puerto Rico Department of Justice interpret Law 203 (which was passed after Law 239) to supersede Law 239. At the very least, Law 203 imposes additional requirements on health care cooperatives, which Coopharma cannot meet. 7 Cf. Patrick v. Burget, 486 U.S. 94, 101 (1988) (‘‘The active supervision prong of the Midcal test requires that state officials have and exercise power to review particular anticompetitive acts of private parties and disapprove those that fail to accord with state policy.’’). 3 California E:\FR\FM\27AUN1.SGM 27AUN1 51804 Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Notices pmangrum on DSK3VPTVN1PROD with NOTICES de Puerto Rico (‘‘COSSEC’’), has no process in place for reviewing cooperatives’ negotiations with payers or for approving or disapproving prices and other terms that result from such negotiations. The Proposed Consent Order The proposed consent order is designed to prevent the continuance and recurrence of the illegal conduct alleged in the proposed complaint, while allowing Coopharma to engage in legitimate joint conduct. Paragraph II prevents Coopharma from continuing the challenged conduct. Paragraph II.A prohibits Respondent from entering into or facilitating agreements between or among any pharmacies: (1) To negotiate on behalf of any pharmacy with any payer; (2) to refuse to deal or threaten to refuse to deal with any payer; (3) to include any term, condition, or requirement upon which any pharmacy deals, or is willing to deal, with any payer, but not limited to, price terms; or (4) not to deal individually with any payer, or not to deal with any payer other than through Respondent. The other parts of Paragraph II reinforce these general prohibitions. Paragraph II.B prohibits Respondent from facilitating exchanges of information between pharmacies concerning whether, and on what terms, to contract with a payer. Paragraph II.C bars attempts to engage in any action prohibited by Paragraph II.A or II.B, and Paragraph II.D proscribes encouraging, suggesting, advising, pressuring, inducing, or attempting to induce any person to engage in any action that would be prohibited by Paragraphs II.A through II.C. Paragraph III is designed to prevent the challenged conduct from reoccurring. Paragraph III.A requires Coopharma to send a copy of the complaint and consent order to its members, its management and staff, and any payers with whom Coopharma has contracted at any time since January 1, 2008. Paragraph III.B allows for contract termination if a payer voluntarily submits a request to Coopharma to terminate its contract. Pursuant to such a request, Paragraph III.B requires Coopharma to terminate, without penalty, any pre-existing payer contracts. Upon receiving such request, Paragraph III.C requires that Coopharma notify in writing each pharmacy that provides services through that contract to be terminated. Paragraph III.D requires Coopharma, for three years, to distribute a copy of the complaint and consent order to new members, officers, directors, and employees, and to payers VerDate Mar<15>2010 15:04 Aug 24, 2012 Jkt 226001 who begin contracting with Coopharma and to post them on its Web site. Paragraphs IV, V, and VI impose various obligations on Coopharma to report or to provide access to information to the Commission to facilitate its compliance with the consent order. Finally, Paragraph VII provides that the proposed consent order will expire 20 years from the date it is issued. By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2012–20955 Filed 8–24–12; 8:45 am] BILLING CODE 6750–01–P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION [OMB Control No. 9000–0026; Docket 2012– 0076; Sequence 18] Federal Acquisition Regulation; Information Collection; Change Order Accounting Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Notice of request for public comments regarding an extension to an existing OMB clearance. AGENCY: Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement concerning change order accounting. Public comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the Federal Acquisition Regulations (FAR), and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology. SUMMARY: PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 Submit comments on or before October 26, 2012. ADDRESSES: Submit comments identified by Information Collection 9000–0026, Change Order Accounting by any of the following methods: • Regulations.gov: https:// www.regulations.gov. Submit comments via the Federal eRulemaking portal by inputting ‘‘Information Collection 9000–0026, Change Order Accounting’’ under the heading ‘‘Enter Keyword or ID’’ and selecting ‘‘Search’’. Select the link ‘‘Submit a Comment’’ that corresponds with ‘‘Information 9000–0026, Change Order Accounting’’. Follow the instructions provided at the ‘‘Submit a Comment’’ screen. Please include your name, company name (if any), and ‘‘Information Collection 9000–0026, Change Order Accounting’’ on your attached document. • Fax: 202–501–4067. • Mail: General Services Administration, Regulatory Secretariat (MVCB), 1275 First Street NE., Washington, DC 20417. ATTN: Hada Flowers/IC 9000–0026, Change Order Accounting. Instructions: Please submit comments only and cite Information Collection 9000–0026, Change Order Accounting, in all correspondence related to this collection. All comments received will be posted without change to https:// www.regulations.gov, including any personal and/or business confidential information provided. FOR FURTHER INFORMATION CONTACT: Mr. Michael O. Jackson, Procurement Analyst, Office of Governmentwide Acquisition Policy, GSA, (202) 208– 4949, or email at michaelo.jackson@gsa.gov. SUPPLEMENTARY INFORMATION: DATES: A. Purpose FAR 43.205 allows a contracting officer, whenever the estimated cost of a change or series of related changes under a contract exceeds $100,000, to assert the right in the clause at FAR 52.243–6, Change Order Accounting, to require the contractor to maintain separate accounts for each change or series of related changes. Each account shall record all incurred segregable, direct costs (less allocable credits) of work, changed and unchanged, allocable to the change. These accounts are to be maintained until the parties agree to an equitable adjustment for the changes or until the matter is conclusively disposed of under the Disputes clause. This requirement is necessary in order to be able to account properly for costs associated with E:\FR\FM\27AUN1.SGM 27AUN1

Agencies

[Federal Register Volume 77, Number 166 (Monday, August 27, 2012)]
[Notices]
[Pages 51801-51804]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20955]


=======================================================================
-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

[File No. 101 0079]


Cooperativa de Farmacias Puertorriquenas; Analysis of Agreement 
Containing Consent Order to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint and the terms of the consent order--embodied in the consent 
agreement--that would settle these allegations.

DATES: Comments must be received on or before September 20, 2012.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Coopharma, File No. 
101 0079'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/coopharmaconsentument, by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, mail or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex 
D), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Randall Marks (202-326-2571), FTC,

[[Page 51802]]

Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 the 
Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that 
the above-captioned consent agreement containing a consent order to 
cease and desist, having been filed with and accepted, subject to final 
approval, by the Commission, has been placed on the public record for a 
period of thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for August 21, 2012), on the World Wide Web, at https://www.ftc.gov/os/actions.shtm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue NW., Washington, DC 
20580, either in person or by calling (202) 326-2222.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before September 20, 
2012. Write ``Coopharma, File No. 101 0079'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the public Commission Web site, at https://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to 
remove individuals' home contact information from comments before 
placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which is obtained from any person and which is privileged or 
confidential,'' as provided in Section 6(f) of the FTC Act, 15 U.S.C. 
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do 
not include competitively sensitive information such as costs, sales 
statistics, inventories, formulas, patterns, devices, manufacturing 
processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
---------------------------------------------------------------------------

    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------

    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/coopharmaconsentument by following the instructions on the web-
based form. If this Notice appears at https://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``Coopharma, File No. 101 
0079'' on your comment and on the envelope, and mail or deliver it to 
the following address: Federal Trade Commission, Office of the 
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW., 
Washington, DC 20580. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Visit the Commission Web site at https://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before September 20, 2012. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at https://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing a proposed consent order with 
Cooperativa de Farmacias Puertorrique[ntilde]as (``Coopharma'' or 
``Respondent''). The agreement settles charges that Coopharma violated 
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 
45, by negotiating, entering into, and implementing agreements among 
its member pharmacy owners to fix the prices on which they contract 
with third-party payers in Puerto Rico.
    The proposed consent order has been placed on the public record for 
30 days to receive comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will review the agreement and the comments 
received, and will decide whether it should withdraw from the agreement 
or make the proposed consent order final.
    The purpose of this analysis is to facilitate public comment on the 
proposed consent order. The analysis is not intended to constitute an 
official interpretation of the agreement and proposed consent order, or 
to modify their terms in any way. Further, the proposed consent order 
has been entered into for settlement purposes only and does not 
constitute an admission by Respondent that it violated the law or that 
the facts alleged in the proposed complaint (other than jurisdictional 
facts) are true.

The Proposed Complaint

    Coopharma is a not-for-profit corporation organized and doing 
business as a cooperative under the laws of Puerto Rico. Coopharma 
consists of approximately 300 pharmacy owners who own roughly 360 
community pharmacies in Puerto Rico. Coopharma members control at least 
a third of the pharmacies in Puerto Rico and the organization has a 
particularly strong presence on the western side of the main island.
    Coopharma was established with the principal purpose of negotiating 
on behalf of its members and entering into single-signature ``master 
contracts'' with payers that bind all Coopharma pharmacies. The 
proposed complaint alleges that Coopharma members negotiated 
collectively through Coopharma to obtain higher reimbursement rates 
than its members were receiving in their individual contracts with 
payers, including pharmacy benefits managers and insurers.
    The proposed complaint alleges that Coopharma's member pharmacies 
restrained competition by jointly negotiating and entering into 
agreements with third-party payers.

[[Page 51803]]

Coopharma achieved this result by encouraging its members: (1) To 
refuse to deal with third-party payers except through Coopharma; and 
(2) to threaten termination, or actually terminate, contracts with 
payers that refused to deal with Coopharma on the terms it demanded.
    Coopharma collectively negotiated reimbursement rates with more 
than ten payers and has reached agreements on behalf of its members 
with seven of them. The mere threat of Coopharma members' collective 
action led two additional payers to pay higher rates. The proposed 
complaint alleges that Coopharma's actions caused payers to pay higher 
reimbursement rates to Coopharma members, and that this price increase 
ultimately may be passed along to consumers in the form of higher 
premium payments, diminished service, or reduced coverage. As a result, 
Coopharma's actions caused substantial harm to the consumers of Puerto 
Rico. Coopharma's conduct was unrelated to any efficiency-enhancing 
integration among its members.

Negotiations With CVS-Caremark

    As a specific example of Coopharma's misconduct, the proposed 
complaint alleges that CVS-Caremark (``Caremark''), a pharmacy benefits 
manager operating in Puerto Rico, was forced to rescind a rate cut and 
to enter into a master contract at a higher rate because of the 
collective action of Coopharma members.
    In 2008, Caremark notified pharmacies throughout the country that 
it was reducing reimbursement on its Medicare Part D contracts. 
Coopharma mobilized its members to collectively resist that rate 
change. Coopharma provided its members with a form letter, which many 
sent, rejecting the new Medicare Part D contracts and telling Caremark 
to negotiate rates through Coopharma. Coopharma then informed Caremark 
that its members would not accept Caremark's reimbursement offer and 
demanded higher rates. Coopharma also informed certain Caremark clients 
that Caremark was threatening to terminate pharmacies that did not 
accept Caremark's rate change. This pressure led Caremark to rescind 
the Part D rate change for the pharmacies that sent letters rejecting 
the change.
    Coopharma continued to pressure Caremark to enter into a master 
contract on all lines of business, including Medicare Part D. Coopharma 
used the same basic tactics to accomplish this goal, by: (1) Demanding 
that Caremark negotiate exclusively through Coopharma; (2) threatening 
that its members would terminate their Caremark contracts; and (3) 
contacting Caremark's clients. Indeed, Coopharma took the matter public 
by placing a newspaper advertisement stating that negotiations with 
Caremark had failed and that, as of May 28, 2009, ``we will not 
continue providing services'' to Caremark patients.
    In August 2009, Caremark agreed to replace Coopharma's members' 
individual contracts with a master contract with Coopharma. The 
proposed complaint alleges that Caremark's price concessions cost it 
approximately $640,000 in 2009 alone.

Other Coercive Conduct

    In addition, the proposed complaint alleges that in at least two 
instances, the mere threat of collective terminations benefitted 
individual Coopharma pharmacies at a cost of millions of dollars to 
third-party payers. Coopharma pharmacies obtained higher reimbursement 
rates from third-party payers Medco and Medicare Mucho Mas even though 
negotiations with Coopharma did not result in a master contract. During 
its negotiations with Medco, Coopharma threatened to pull all Coopharma 
pharmacies out of Medco's network. In an attempt to prevent such a 
disruption of its network, Medco raised the reimbursement rates it paid 
to individual Coopharma pharmacies, a concession that cost Medco and 
its clients over $2 million between 2007 and 2011. Medicare Mucho Mas, 
a large Medicare Advantage payer, also feared that Coopharma could 
cause a similar disruption in its pharmacy network. As a result, 
Medicare Mucho Mas' pharmacy benefits manager offered a higher 
reimbursement rate to Coopharma pharmacies.
    Finally, the proposed complaint alleges that Coopharma attempted to 
use collective action to resist a reimbursement rate reduction by 
health insurer Humana. Coopharma attempted to coerce Humana into 
maintaining its reimbursement rates by threatening termination of the 
individual contracts and pressuring it into entering into a master 
contract. When Humana asserted that Coopharma lacked the legal 
authority to terminate its members' contracts, Coopharma encouraged its 
members to terminate their contracts individually.

Coopharma Cannot Qualify for State Action Immunity

    The proposed complaint alleges that Coopharma's anticompetitive 
conduct cannot be shielded by the state action doctrine. The state 
action doctrine provides that states are not subject to federal 
antitrust liability, and that by extension certain subordinate state 
entities and private parties exercising state-granted powers may be 
immunized as well.\2\ Private parties claiming the protection of this 
immunity must meet two elements. First, private parties must 
demonstrate that the challenged conduct was undertaken pursuant to a 
clearly articulated state policy to displace competition with 
regulation. Second, private parties must show that the challenged 
conduct has been actively supervised by the state.\3\ The proposed 
complaint alleges that neither requirement is satisfied here.
---------------------------------------------------------------------------

    \2\ See, e.g., Parker v. Brown, 317 U.S. 341 (1943).
    \3\ California Retail Liquor Dealers Ass'n v. Midcal Aluminum, 
Inc., 445 U.S. 97, 105 (1980).
---------------------------------------------------------------------------

    Puerto Rico has not clearly articulated a policy to replace 
competition with the challenged conduct. Law 203 regulates ``collective 
bargaining'' between providers of health care services, including 
pharmacies, on the one hand, and payers, on the other.\4\ However, Law 
203 limits collective bargaining to situations where the providers 
obtain a certificate verifying that they constitute less than 20 
percent of providers in a particular area, do not engage in boycotts, 
submit to mandatory arbitration in the case of an impasse, and comply 
with certain other requirements.\5\ Coopharma has not-- and cannot--
satisfy these requirements.\6\
---------------------------------------------------------------------------

    \4\ 26 L.P.R.A. Sec.  3101, et seq.
    \5\ E.g., 26 L.P.R.A. Sec. Sec.  31.040; 31.050; 31.060.
    \6\ The Commission is aware that Law 239, which regulates 
cooperatives generally, declared that cooperatives ``shall not be 
considered conspiracies or cartels to restrict business.'' 5 
L.P.R.A. Sec.  4516 (Law 239, Sec.  20.5). The Commission and the 
Puerto Rico Department of Justice interpret Law 203 (which was 
passed after Law 239) to supersede Law 239. At the very least, Law 
203 imposes additional requirements on health care cooperatives, 
which Coopharma cannot meet.
---------------------------------------------------------------------------

    The proposed complaint also alleges that Puerto Rico has not 
actively supervised Coopharma's conduct because no Puerto Rican 
official has exercised the power to review, approve, or disapprove 
either the rates in Coopharma's contracts with payers or the coercive 
collective action it used to obtain them.\7\ Under Law 203, Coopharma 
has neither sought to comply with nor satisfied any of the law's 
requirements. Even under Law 239, the Puerto Rico agency charged with 
the general regulation of cooperatives, the Corporacion para la 
Supervision y Seguro de Cooperativas

[[Page 51804]]

de Puerto Rico (``COSSEC''), has no process in place for reviewing 
cooperatives' negotiations with payers or for approving or disapproving 
prices and other terms that result from such negotiations.
---------------------------------------------------------------------------

    \7\ Cf. Patrick v. Burget, 486 U.S. 94, 101 (1988) (``The active 
supervision prong of the Midcal test requires that state officials 
have and exercise power to review particular anticompetitive acts of 
private parties and disapprove those that fail to accord with state 
policy.'').
---------------------------------------------------------------------------

The Proposed Consent Order

    The proposed consent order is designed to prevent the continuance 
and recurrence of the illegal conduct alleged in the proposed 
complaint, while allowing Coopharma to engage in legitimate joint 
conduct.
    Paragraph II prevents Coopharma from continuing the challenged 
conduct. Paragraph II.A prohibits Respondent from entering into or 
facilitating agreements between or among any pharmacies: (1) To 
negotiate on behalf of any pharmacy with any payer; (2) to refuse to 
deal or threaten to refuse to deal with any payer; (3) to include any 
term, condition, or requirement upon which any pharmacy deals, or is 
willing to deal, with any payer, but not limited to, price terms; or 
(4) not to deal individually with any payer, or not to deal with any 
payer other than through Respondent.
    The other parts of Paragraph II reinforce these general 
prohibitions. Paragraph II.B prohibits Respondent from facilitating 
exchanges of information between pharmacies concerning whether, and on 
what terms, to contract with a payer. Paragraph II.C bars attempts to 
engage in any action prohibited by Paragraph II.A or II.B, and 
Paragraph II.D proscribes encouraging, suggesting, advising, 
pressuring, inducing, or attempting to induce any person to engage in 
any action that would be prohibited by Paragraphs II.A through II.C.
    Paragraph III is designed to prevent the challenged conduct from 
reoccurring. Paragraph III.A requires Coopharma to send a copy of the 
complaint and consent order to its members, its management and staff, 
and any payers with whom Coopharma has contracted at any time since 
January 1, 2008. Paragraph III.B allows for contract termination if a 
payer voluntarily submits a request to Coopharma to terminate its 
contract. Pursuant to such a request, Paragraph III.B requires 
Coopharma to terminate, without penalty, any pre-existing payer 
contracts. Upon receiving such request, Paragraph III.C requires that 
Coopharma notify in writing each pharmacy that provides services 
through that contract to be terminated. Paragraph III.D requires 
Coopharma, for three years, to distribute a copy of the complaint and 
consent order to new members, officers, directors, and employees, and 
to payers who begin contracting with Coopharma and to post them on its 
Web site.
    Paragraphs IV, V, and VI impose various obligations on Coopharma to 
report or to provide access to information to the Commission to 
facilitate its compliance with the consent order. Finally, Paragraph 
VII provides that the proposed consent order will expire 20 years from 
the date it is issued.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2012-20955 Filed 8-24-12; 8:45 am]
BILLING CODE 6750-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.