[Federal Register Volume 59, Number 227 (Monday, November 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29183]


[Federal Register: November 28, 1994]


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FEDERAL TRADE COMMISSION
[File No. 941-0102]


Eli Lilly and Company, Inc.; Proposed Consent Agreement With 
Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
require, among other things, an Indiana producer of pharmaceutical 
products to: Ensure that PCS Health Systems (PCS) maintains an open 
formulary; appoint an independent Pharmacy and Therapeutics (P&T) 
Committee of health care professionals to objectively evaluate drugs 
for inclusion in the PCS open formulary; ensure that PCS accepts all 
discounts, rebates or other concessions offered by Eli Lilly's 
competitors for drugs that are accepted for listing on the open 
formulary, and to accurately reflect such discounts in ranking the 
drugs on the formulary; and, for five years, obtain Commission approval 
before acquiring an interest in any firm that provides formulary 
services to more than 2 million people in the United States. In 
addition, the consent agreement would prohibit PCS and Eli Lilly from 
sharing proprietary or other non-public information, such as price 
data, from competitors whose drugs may be placed on a PCS formulary.

DATES: Comments must be received on or before January 27, 1995.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
Michael McNeely, FTC/S-3308, Washington, DC 20580. (202) 326-2904.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the 
Commission's rules of practice (16 CFR 2.34), notice is hereby given 
that the following 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 sixty (60) days. Public comment is invited. Such comments or 
views will be considered by the Commission and will be available for 
inspection and copying at its principal office in accordance with 
Sec. 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR 
4.9(b)(6)(ii)).

Agreement Containing Consent Order

    The Federal Trade Commission (``Commission''), having initiated an 
investigation of the acquisition by Eli Lilly and Company (``Lilly'') 
of the PCS Health Systems (``PCS'') business of McKesson Corporation 
(``McKesson''), and it now appearing that Lilly, hereinafter sometimes 
referred to as ``proposed respondent,'' is willing to enter into an 
agreement containing an Order to remedy the alleged lessening of 
competition resulting from such acquisition, and providing for other 
relief:
    It is hereby agreed by and between proposed respondent, by its duly 
authorized officer and its attorney, and counsel for the Commission 
that:
    1. Proposed respondent Lilly is a corporation organized, existing 
and doing business under and by virtue of the laws of the State of 
Indiana, with its office and principal place of business located at 
Lilly Corporate Center, Indianapolis, Indiana 46285.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft of complaint here attached.
    3. Proposed respondent waives:
    a. Any further procedural steps;
    b. The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    c. All rights to seek judicial review or otherwise to challenge or 
contest the validity of the Order entered pursuant to this agreement; 
and
    d. Any claim under the Equal Access to Justice Act.
    4. This agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
agreement is accepted by the Commission it, together with the draft of 
complaint contemplated thereby, will be placed on the public record for 
a period of sixty (60) days and information in respect thereto publicly 
released. The Commission thereafter may either withdraw its acceptance 
of this agreement and so notify the proposed respondent, in which event 
it will take such action as it may consider appropriate, or issue and 
serve its complaint (in such form as the circumstances may require) and 
decision, in disposition of the proceeding.
    5. This agreement is for settlement purposes only and does not 
constitute an admission by proposed respondent that the law has been 
violated as alleged in the draft of complaint here attached, or that 
the facts as alleged in the draft complaint, other than jurisdictional 
facts, are true.
    6. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Sec. 2.34 of the Commission's 
rules, the Commission may, without further notice to the proposed 
respondent, (1) issue its complaint corresponding in form and substance 
with the draft of complaint here attached and its decision containing 
the following Order in disposition of the proceeding, and (2) make 
information public with respect thereto. When so entered, the Order 
shall have the same force and effect and may be altered, modified or 
set aside in the same manner and within the same time provided by 
statute for other orders. The Order shall become final upon service. 
Delivery by the U.S. Postal Service of the complaint and decision 
containing the agreed-to Order to proposed respondent's address as 
stated in this agreement shall constitute service. Proposed respondent 
waives any right it may have to any other manner of service. The 
compliant may be used in construing the terms of the Order, and no 
agreement, understanding, representation or interpretation not 
contained in the Order or the agreement may be used to vary or 
contradict the terms of the Order.
    7. Proposed respondent has read the draft of compliant and order 
contemplated hereby. Proposed respondent understands that once the 
Order has been issued, it will be required to file one or more 
compliance reports showing that it has fully complied with the Order. 
Proposed respondent further understands that it may be liable for civil 
penalties in the amount provided by law for each violation of the Order 
after it becomes final.

Order

I
    It is ordered, That the following definitions shall apply herein:
    A. ``Respondent'' or ``Lilly'' means Eli Lilly and Company, its 
predecessors, divisions, subsidiaries, affiliates, partnerships, joint 
ventures, successors and assigns, and all directors, officers, 
employees, agents and representatives of the foregoing.
    B. ``McKesson'' means McKesson Corporation, its predecessors, 
divisions, subsidiaries, affiliates, partnerships, joint ventures, 
successors and assigns, and all directors, officers, employees, agents 
and representatives of the foregoing.
    C. ``PCS'' means PCS Health Systems, Inc., its predecessors, 
divisions, subsidiaries, affiliates, partnerships, joint ventures, 
successors and assigns, and all directors, officers, employees, agents 
and representatives of the foregoing.
    D. ``Commission'' means the Federal Trade Commission.
    E. ``Formulary'' means a listing, by therapeutic category, of 
branded and generic ambulatory drug products that are approved for use 
by the U.S. Food & Drug Administration (``FDA''), and which is made 
available to pharmacies, physicians, third-party payors, or other 
persons involved in the healthcare industry, to guide in the 
prescribing or dispensing of pharmaceuticals. An ``Open Formulary'' is 
a formulary that allows the inclusion of any ambulatory prescription 
drug product approved by the FDA for use in the United States, which 
the P&T Committee (defined below) determines is appropriate for 
inclusion in such formulary. For purposes of this Order, an Open 
Formulary may provide truthful information stating or indicating the 
relative costs or benefits of drugs on the formulary.
    F. ``Pharmacy Benefit Management Services'' or ``PBM Services'' 
means services provided by a pharmacy benefits manager, such as 
formulary services, negotiation of rebates or discounts from 
pharmaceutical manufacturers, prescription claims processing, and drug 
utilization review.
    G. ``Formulary Services'' means the provision, development, 
establishment, management or maintenance of a formulary by a pharmacy 
benefits manager. For purposes of this Order, ``management'' of a 
formulary includes the negotiation and administration of rebate or 
discount agreements with pharmaceutical manufacturers for drugs 
included on a formulary.
    H. ``Lilly Non-Public Information'' means information not in the 
public domain that is provided to Lilly in its capacity as a 
pharmaceutical manufacturer by a supplier of PBM Services and that 
concerns bids, proposals, contracts, prices, rebates, discounts, or 
other terms or conditions of sale of any person other than PCS.
    I. ``PCS Non-Public Information'' means information not in the 
public domain that is provided to PCS in its capacity as a supplier of 
PBM Services by a manufacturer or seller of prescription drug products 
and that concerns bids, proposals, contracts, prices, rebates, 
discounts, or other terms or conditions of sale of any person other 
than Lilly.
    J. ``Pharmacy and Therapeutics Committee'' or ``P&T Committee'' 
means a group of healthcare professionals, such as doctors, 
pharmacists, and pharmacologists, appointed for the purpose of 
evaluating prescription drug products for inclusion on a formulary.
II
    It is ordered, That:
    A. Within thirty (30) days from the date this Order becomes final, 
Lilly shall cause PCS to maintain an Open Formulary. As of the date 
this Order becomes final, the PCS ``Clinical Formulary and Prescribing 
Guidelines 1994-1995,'' a copy of which is attached hereto as Appendix 
A, on file at the Commission, shall be deemed an Open Formulary that 
complies with this Paragraph II.A.
    B. Within thirty (30) days from the date this Order becomes final, 
Lilly shall cause PCS to appoint an independent P&T Committee with the 
authority and responsibility to maintain the Open Formulary required by 
Paragraph II.A above. Such P&T Committee shall make all decisions 
concerning the inclusion of drugs on such Open Formulary, the exclusion 
of drugs from such Open Formulary, and the clinical and therapeutic 
advice and evaluation concerning drugs on such Open Formulary, and 
shall operate according to the following provisions:
    1. Such P&T Committee shall consist of at least nine (9) members, 
all of whom shall be physicians, pharmacists, pharmacologists, or other 
healthcare professionals.
    2. A majority of the P&T Committee shall consist of persons who are 
not employees, officers, directors, or agents of, and who have no 
financial interest in: (a) Lilly, (b) PCS, or (c) any other person who 
has an ownership interest in Lilly or PCS. Such persons shall be 
referred to herein as ``independent'' members of the P&T Committee.
    3. each independent member of the P&T Committee shall have one vote 
on all decisions of the P&T Committee.
    4. All members of the P&T Committee who are employees, officers, 
directors, or agents of, or who have a financial interest in, Lilly, 
PCS, or any other person who has an ownership interest in Lilly or PCS, 
shall not be entitled to vote on decisions of the P&T Committee.
    5. All independent members of the P&T Committee shall be appointed 
for three-year terms, except that for the initial board, one-third of 
the independent members shall be appointed for one-year terms, one-
third shall be appointed for two-year terms, and the remaining 
independent members shall be appointed for three-year terms. At the 
expiration of their terms, or upon the occurrence of a vacancy, members 
may be reappointed, or new members may be appointed, by a majority of 
the then-appointed independent members of the P&T Committee.
    6. No independent member of the P&T Committee may be removed except 
for cause by vote of a majority of the independent members of the P&T 
Committee.
    7. In performing its responsibilities in maintaining the Open 
Formulary, the P&T Committee shall utilize only criteria relating to 
safety, efficacy, FDA approved indications, side effects, 
contraindications, pharmacokinetics, patient compliance, physician 
follow-up requirements, effect on emergency room visits and 
hospitalizations, laboratory tests, cost, and similar objective 
factors. Such P&T Committee shall give no preference to the products of 
Lilly, or of any other person with an ownership interest in PCS, except 
on the basis of such objective criteria.
    8. Lilly shall cause PCS to cover the costs and expenses of the P&T 
Committee, and Lilly shall cause PCS to indemnify the P&T Committee 
against any losses or claims of any kind that might arise out of its 
performance of functions under this Order, except to the extent that 
such losses or claims result from misfeasance, gross negligence, 
willful or wanton acts, or bad faith.
    9. Such P&T Committee shall maintain written records, for five (5) 
years from the date thereof, explaining the basis and rationale for all 
P&T Committee decisions relating to the exclusion of any products from, 
or the ranking of products on, the Open Formulary required by Paragraph 
II.A.
    C. Lilly shall cause PCS to accept all discounts, rebates or other 
concessions offered by any manufacturer, seller or distributor of 
pharmaceutical products included by the P&T Committee on the Open 
Formulary, and Lilly shall cause PCS to ensure that all such discounts, 
rebates, or concessions are truthfully and accurately reflected in 
determining relative rankings of products on the Open Formulary.
    D. Nothing in this Order shall preclude PCS from offering any 
formulary other than the Open Formulary to any customer.
    E. Lilly shall cause PCS to provide a copy of this Order to each 
member of the P&T Committee on or before the date of each such person's 
appointment to such P&T Committee.
III
    It is further ordered, that:
    A. Lilly shall not provide, disclose, or otherwise make available 
to PCS any Lilly Non-Public Information; and
    B. PCS shall not provide, disclose, or otherwise make available to 
Lilly any PCS Non-Public Information.
IV
    It is further ordered, That Lilly shall retain all documents, and 
shall cause PCS to separately retain all documents, that relate to (A) 
the exclusion of any prescription drug products from the Open Formulary 
required by Paragraph II.A above, (B) any preference or ranking 
accorded to any prescription drug product on the Open Formulary 
required by Paragraph II.A above, or (C) statements or indications of 
discounts, rebates, or other concessions, as described in Paragraph 
II.C above, for a period of five (5) years from the date such document 
is created or received.
V
    It is further ordered, That Lilly shall disclose the availability 
of the Open Formulary as follows:
    A. Lilly shall cause PCS to disclose the availability of the Open 
Formulary to all persons who currently have an agreement with PCS 
concerning PBM services or concerning the inclusion of pharmaceuticals 
on a formulary, by providing to each such person a letter containing 
the following statement within ten (10) days after initiation of 
contact between PCS and such person regarding renewal or extension of 
such person's existing agreement with PCS:

    PCS maintains an Open Formulary that allows, subject to the 
determination of an independent Pharmacy and Therapeutics Committee, 
the inclusion of any ambulatory prescription drug product approved 
by the FDA for use in the United States. This Open Formulary will be 
provided to you upon request.

    B. For a period of five (5) years from the date this Order becomes 
final, Lilly shall cause PCS to provide in writing the statement set 
forth in Paragraph V.A above to each prospective customer of PCS at the 
time of PCS's response to such prospective customer's request for 
proposal, or at the time of PCS's initial written proposal to such 
prospective customer, whichever occurs first.
VI
    It is further ordered, That, for a period of five (5) years from 
the date this Order becomes final, respondent shall not, without the 
prior approval of the Commission, directly or indirectly, through 
subsidiaries, partnerships, or otherwise:
    A. Acquire any stock, share capital, equity, leasehold or other 
interest in any person, corporate or non-corporate, engaged in the 
providing of Formulary Services in the United States, if such person 
has more than two (2) million lives covered by its Formulary Services 
in the United States;
    B. Acquire any assets used for, or previously used for (and still 
suitable for use for), the providing of Formulary Services in the 
United States from any person who has (or had within the two years 
preceding such acquisition) more than two (2) million lives covered by 
its Formulary Services in the United States; or
    C. Enter into any agreement, understanding, or condition with 
McKesson or any other wholesaler of pharmaceutical products that Lilly 
will sell or distribute pharmaceutical products bearing any brand or 
trade name used by Lilly, in the United States or any part of the 
United States, exclusively through such wholesaler.
VII
    It is further ordered, That respondent shall notify the Commission 
at least thirty (30) days prior to any proposed change in the corporate 
Respondent such as dissolution, assignment, sale resulting in the 
emergence of a successor corporation, or the creation or dissolution of 
subsidiaries or any other change in the corporation that may affect 
compliance obligations arising out of the Order.
VIII
    It is further ordered, That:
    A. Within sixty (60) days after the date this Order becomes final, 
Respondent shall submit to the Commission a verified written report 
setting forth in detail the manner and form in which it intends to 
comply, is complying, and has complied with this Order.
    B. One year (1) from the date this Order becomes final, annually 
for the next nine (9) years on the anniversary of the date this Order 
becomes final, and at other times as the Commission may require, 
respondent shall file a verified written report with the Commission 
setting forth in detail the manner and form in which it has complied 
and is complying with this Order.
    C. Respondent shall include in its compliance reports a copy of the 
Open Formulary required by Paragraph II.A above, and all written 
communications, internal memoranda, and reports and recommendations 
concerning compliance with the Order.
IX
    It is further ordered, That, for the purpose of determining or 
securing compliance with this Order, respondent shall permit any duly 
authorized representative of the Commission:
    A. Access, during office hours and in the presence of counsel, to 
inspect and copy all books, ledgers, accounts, correspondence, 
memoranda and other records and documents in the possession or under 
the control of respondent relating to any matters contained in this 
Order; and
    B. Upon five days' notice to respondent and without restraint or 
interference from it, to interview officers, directors, or employees of 
respondent.
X
    It is further ordered, That this Order shall terminate ten (10) 
years from the date this Order becomes final.

Analysis of Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an Agreement Containing Consent Order from Eli Lilly and 
Company (``Lilly'' or ``Proposed Respondent'') in resolution of 
antitrust concerns arising from Lilly's proposed acquisition of PCS 
Health Systems, Inc. (``PCS'') from McKesson Corporation 
(``McKesson'').
    The proposed consent order (``Order'') has been placed on the 
public record for sixty (60) days for reception of comments by 
interested persons. Comments received during this period will become 
part of the public record. After sixty (60) days, the Commission will 
again review the Agreement and the comments received and will decide 
whether it should withdraw from the Agreement or make final the 
Agreement's proposed Order.
    The Commission has reason to believe that Lilly's acquisition of 
PCS would substantially lessen competition in violation of section 7 of 
the Clayton Act, as amended, 15 U.S.C. 18 and section 5 of the FTC Act, 
as amended, 15 U.S.C. 45. The Order, if issued by the Commission, would 
settle the allegations of the proposed Complaint (``Complaint'').
    The Complaint in this matter alleges that Lilly is engaged in the 
development, production and sale of pharmaceutical products, including 
Prozac, an antidepressant (specifically, a selective serotonin reuptake 
inhibitor); Humulin, an injectable insulin; Ceclor, an oral antibiotic; 
and Axid, an anti-ulcer product (specifically, an H2 antagonist). It 
further alleges that through its subsidiary PCS, McKesson is engaged in 
the business of providing pharmacy benefit management (``PBM'') 
services to insurance companies, third party payors, and other members 
of the healthcare industry.
    The Complaint further alleges that a relevant line of commerce 
within which to analyze the effects of this acquisition is the 
provision of PBM services by national full-service PBM firms, and any 
narrower markets contained therein. Other relevant lines of commerce 
within which to analyze the effects of this acquisition are the 
development, manufacture and sale of pharmaceutical products in 
specific therapeutic categories, and narrower markets contained therein 
(including, but not limited to, the markets for injectable insulin, 
selective serotonin reuptake inhibitors, H2 antagonists, and anti-ulcer 
drugs). It further alleges that the relevant market for PBM services by 
national full-service PBM firms, as well as the relevant markets for 
pharmaceutical products in specific therapeutic categories, are highly 
concentrated.
    The Complaint further alleges that there are substantial entry 
barriers into the relevant markets. Even if new entry were to occur, it 
would take a long time, during which time substantial harm to 
competition could occur.
    The Complaint further alleges that as part of its PBM services, PCS 
maintains a drug formulary, which is a listing, by therapeutic 
category, of ambulatory drug products that are approved for use by the 
U.S. Food & Drug Administration, and which is made available to 
pharmacies, physicians, third-party payors, and other persons, to guide 
in the prescribing and dispensing of pharmaceuticals. Lilly 
pharmaceutical products are included on the PCS formulary. PCS provides 
a variety of other PBM services, including claims processing, drug 
utilization review, pharmacy network administration, and related 
services. PCS negotiates with pharmaceutical manufacturers, including 
Lilly, concerning placement on the PCS formulary, rebates, discounts, 
prices to be paid for pharmaceutical products purchased pursuant to 
pharmacy benefit plans managed by PCS, and other issues. PCS thereby 
influences the prices of pharmaceutical products and the availability 
of such products under the PCS pharmacy benefit plans.
    The Complaint further alleges that the Agreement and Plan of Merger 
contains a Memorandum of Understanding (``MOU'') in which Lilly and 
McKesson agreed to investigate closing Lilly's distribution centers and 
having McKesson handle physical distribution of Lilly products to 
wholesalers and possibly be the sole distributor of Lilly products. 
Implementation of this MOU would force wholesalers to deal with 
McKesson to obtain Lilly products or deny them access to Lilly 
products.
    The Complaint further alleges that the effects of the proposed 
acquisition of McKesson by Lilly may be substantially to lessen 
competition in the relevant markets in violation of section 7 of the 
Clayton Act, as amended, 15 U.S.C. 18, and section 5 of the Federal 
Trade Commission Act, as amended, 15 U.S.C. 45, in the following ways, 
among others:
    (a) Products of manufacturers other than Lilly are likely to be 
foreclosed from the PCS formulary;
    (b) Reciprocal dealing, coordinated interaction, interdependent 
conduct, and tacit collusion among Lilly and other vertically 
integrated pharmaceutical companies will be enhanced;
    (c) PCS will be eliminated as an independent negotiator of 
pharmaceutical prices with manufacturers;
    (d) Incentives of other manufacturers to develop innovative 
pharmaceuticals will be diminished;
    (e) Entry into the relevant markets may be more difficult because 
it will require entry at more than one level;
    (f) Competition among drug wholesalers may be reduced because of 
the competitive advantage that control over Lilly drugs will provide 
McKesson; and,
    (g) The price of pharmaceuticals is likely to increase and the 
quality of the pharmaceuticals available to consumers is likely to 
diminish.
    The Complaint further alleges that the proposed acquisition of 
McKesson by Lilly would, if consummated, violate section 7 of the 
Clayton Act, as amended, 15 U.S.C. 18, and section 5 of the Federal 
Trade Commission Act, as amended, 15 U.S.C. 45. It further alleges that 
the Agreement and Plan of Merger between Lilly and McKesson violates 
section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 
45.
    The Order requires Lilly to maintain an open formulary, and 
provides that the existing open PCS formulary will comply with this 
provision. A copy of this formulary is appended to the Order. For the 
purposes of the Order an open formulary is defined as a formulary that 
allows the inclusion of any ambulatory (i.e., non-hospital) 
prescription drug product which the PCS independent Pharmacy and 
Therapeutics Committee (``P&T Committee) determines is appropriate for 
inclusion in such formulary.
    The Order requires that Lilly appoint an independent P&T Committee 
to administer the open formulary. This committee will make all 
decisions concerning the inclusion and exclusion of drugs on the open 
formulary. The order sets forth the parameters under which the P&T 
Committee is to operate.
    The Order also requires that Lilly cause PCS to accept all 
discounts, rebates or other concessions offered by any other 
manufacturer of pharmaceutical products on the open formulary, and 
requires that all such discounts, rebates and concessions be truthfully 
and accurately reflected in determining relative rankings of products 
on the open formulary. Nothing in the Order prohibits Lilly from 
offering closed formularies as well as the open formulary.
    The Order also prohibits Lilly and PCS from providing, disclosing, 
or otherwise making available to each other Non-Public Information. 
This includes information concerning other persons' bids, proposals, 
contracts, prices, rebates, discounts, or other terms and conditions of 
sale.
    The Order also requires Lilly to retain all documents, and cause 
PCS to separately retain all documents, for five years, relating to the 
exclusion of any prescription drugs from the open formulary, any 
preference or ranking accorded to any prescription drug on the open 
formulary, and statements or indications of discounts, rebates or other 
concessions.
    The Order also requires Lilly to make known the availability of the 
open formulary to persons who currently have a PBM service agreement of 
formulary agreement with PCS, and (for a period of five years) to 
prospective customers.
    The Order also prohibits Lilly, for a period of five (5) years from 
the date the Order becomes final, from: Acquiring, without the prior 
approval of the Commission, any stock, share capital, equity, leasehold 
or other interest in any person, corporate or non-corporate, engaged in 
the providing of Formulary Services in the United States, if such 
person has more than two (2) million lives covered by its Formulary 
Services in the United States; acquiring any assets used for, or 
previously used for (and still suitable for use for), the providing of 
Formulary Services in the United States from any person who has (or had 
within the two years preceding such acquisition) more than two (2) 
million lives covered by its Formulary Services in the United States; 
or entering into any agreement, understanding, or condition with 
McKesson or any wholesaler of pharmaceutical products that Lilly will 
sell or distribute pharmaceutical products bearing any brand or trade 
name used by Lilly, in the United States or any part of the United 
States, exclusively through such wholesaler.
    The Order also compels Lilly to fulfill certain standard 
notification, reporting and inspection requirements.
    The Order terminates ten years from the date it becomes final.
    It is anticipated that the Order would resolve the competitive 
problems alleged in the Complaint. The purpose of this analysis is to 
facilitate public comment on the Order, and it is not intended to 
constitute an official interpretation of the agreement and Order or to 
modify it in any way.
    The proposed consent order has been entered into for settlement 
purposes only, and does not constitute an admission by the respondent 
that the law has been violated as alleged in the complaint.
Donald S. Clark,
Secretary.

Joint Statement of Chairman Janet D. Steiger and Commissioner Christine 
A. Varney in Eli Lilly/McKesson, File No. 941-0102

    We voted in favor of the proposed consent agreement with Eli 
Lilly and Company (``Lilly'') in connection with its acquisition of 
PCS Health Systems, Inc. from McKesson Corporation. We believe the 
consent agreement offers immediate effective relief, avoids 
protracted litigation, and represents the best non-structural relief 
available to remedy the potential anticompetitive consequences of 
the transaction. Moreover, the proposed consent achieves these goals 
and allows potential efficiency gains to be realized.
    However, we remain concerned about the overall competitive 
impact of vertical integration by drug companies into the pharmacy 
benefits management market. Through monitoring this proposed order 
and through analysis of these evolving markets, the Commission 
intends to assess all the ramifications of vertical integration 
here.

Dissenting Statement of Commissioner Mary L. Azcuenaga

Eli Lilly and Company, Inc., File No. 941-0102

    Today, the Commissioner accepts a consent order for public 
comment that exudes a lack of conviction in the underlying theory of 
competitive harm on which the order is based. The order does not 
cure the competitive problems alleged in the complaint. Three of the 
four primary provisions in the order are inadequate, and the fourth, 
which addresses a memorandum of understanding between Lilly and 
McKesson, is based on no colorable factual showing of a violation of 
law. In addition, there is no justification for making the duration 
of the order half that of other Commission orders. Finally, imposing 
this order without addressing similar acquisitions raises a question 
of evenhandedness and leaves unanswered the broader question of the 
competitive effect of vertical integration in this industry.
    I dissent.

[FR Doc. 94-29183 Filed 11-25-94; 8:45 am]
BILLING CODE 6750-01-M