FTC Staff Opinion: Yakima Valley Memorial Hospital's Proposed Rx Program Exempt From the Robinson-Patman Act

In a letter issued today, the staff of the Federal Trade Commission advised Yakima Valley Memorial Hospital that its proposal to provide pharmaceuticals purchased at a discount to employees of two affiliate entities is exempt from the Robinson-Patman Act, a U.S. antitrust law that prohibits anti-competitive price discrimination.

The Non-Profit Institutions Act, or NPIA, creates an exemption from the Robinson-Patman Act for purchases of supplies by certain eligible entities for their “own use.” According to the FTC staff opinion letter, the proposed program meets the requirements of the NPIA.

Yakima Valley Memorial Hospital asked the FTC whether a proposal through which it would sell discounted pharmaceuticals available to eligible nonprofits to employees of its two affiliates, Memorial Physicians, PLLC and Valley Imaging, would qualify for the exemption. First, Yakima Valley Memorial Hospital is an eligible institution under the NPIA. Second, consistent with existing case law and prior opinions, the provision of NPIA-discounted pharmaceuticals to employees of entities that are owned by the eligible institution, and intended to help further the mission of the eligible institution, falls within the “own use” requirement of the statute. Therefore, according to staff, the proposed program appears to fall within the NPIA.

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.”