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FTC Staff Opinion: The Methodist Hospital System May Sell Discounted Shortage Drugsto Baytown EMS as an Emergency Humanitarian Gesture

In a letter issued today, the staff of the Federal Trade Commission advised The Methodist Hospital System that its proposal to resell pharmaceuticals it purchased at a discount to Baytown EMS is a permissible emergency humanitarian gesture.  Methodist had requested staff’s analysis of the applicability of the Robinson-Patman Act, a U.S. antitrust law that prohibits anti-competitive price discrimination, to the proposal.

Methodist, a non-profit hospital, purchases its pharmaceuticals at a discounted price available to certain non-profit entities.  Baytown EMS is an emergency transport service that services Methodist and other neighboring hospitals.  Because the nationwide drug shortages have prevented Baytown EMS from maintaining safe inventory levels of certain critical drugs, Methodist proposes to resell limited quantities of those shortage drugs to Baytown EMS.  The sole purpose of Methodist’s proposal is to enable Baytown EMS to maintain safe inventory levels of certain critical products currently in shortage.  Methodist only proposes to continue these sales during the pendency of the shortages. 
Citing a Supreme Court case and a prior Commission advisory opinion, the staff letter to Methodist concludes that Methodist may engage in the proposed sales.

NOTE:  This letter sets out the views of the staff of the FTC’s Bureau of Competition, as authorized by the Commission’s Rules of Practice.  It has not been reviewed or approved by the Commission.  As the Commission’s Rules explain, the staff’s advice is rendered “without prejudice to the right of the Commission later to rescind the advice and, where appropriate, to commence an enforcement proceeding.”

FTC Approves Final Order Settling Charges that Universal Health Services, Inc.’s Acquisition of Ascend Health Corporation Would Have Been Anticompetitive

Following a public comment period, the Federal Trade Commission has approved a final order settling charges that Universal Health Corporation, Inc.’s (UHS) proposed acquisition of Ascend Health Corporation would have been anticompetitive in the market for acute inpatient psychiatric services in the El Paso, Texas/Santa Teresa, New Mexico, area.  The order requires UHS to sell an acute inpatient psychiatric facility in that market to an FTC-approved buyer.

The Commission vote approving the final order was 5-0.  (FTC File No. 121-0157, Docket No. C-4372; the staff contact is Janelle Filson, Bureau of Competition, 202-326-2882; see press release dated October 5, 2012)

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action.  To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20001.  To learn more about the Bureau of Competition, read Competition Counts.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

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