Lilly Gets FTC Subpoena On PBM

In its recently-filed 10Q quarterly report to the US Securities and Exchange Commission, Eli Lilly said that in October it had received a subpoena from the US Federal Trade Commission, which is looking into relationships between drugmakers and pharmacy benefit management companies. The subpoena requested "production of certain documents in connection with a non-public investigation reviewing whether or not the relationships and activities between PBM companies and pharmaceutical companies have violated antitrust laws."

The FTC probe included "a review of whether the company has violated the consent decrees" into which it entered at the time it acquired PCS Health Systems (which it bought for $4 billion in mid-1995). At the time Lilly acquired PCS from McKesson, it agreed to set up firewalls between its activities and those of PCS in order to restrict Lilly's power to reduce free competition among its products and those of rival drug firms. "The company believes that all of its actions and those of PCS have been lawful, proper and in accordance with the PCS consent decrees," Lilly said in the 10Q.

A Lilly spokesman said that the subpoena looks like a continuation of what the FTC started almost two years ago, and noted that Lilly is cooperating fully. Mariela Haggar of Deutsche Morgan Grenfell agreed, noting that "this looks like a continuation of an old saga....Merck & Co and Medco have been dealing with the same set of allegations for some time."