US FTC Agreement For Lilly's PCS Acquisition

The US Federal Trade Commission and Eli Lilly, which is proposing to acquire the pharmacy benefit manager PCS from McKesson, have reached an agreement on the acquisition which will bind Lilly to strict conditions as a result of the FTC's concerns over the anticompetitive nature of the deal.

It is understood that the agreement between Lilly and the FTC is expected to serve as a model for other companies that have also acquired PBMs, such as Merck & Co (Medco Containment Services) and SmithKline Beecham (Diversified Pharmaceutical Services). SB's deal is currently under re-examination by the FTC, which cleared the deal earlier this year (Marketletters passim). The FTC says it can go back and re- examine deals it has approved in the past.

Full details of the FTC agreement with Lilly are yet to be made public, but would appear to focus on such deals resulting in less choice for consumers and higher drug prices. In the Lilly deal, the FTC wants to see that PCS customers have free access to drug lists so that companies like Lilly cannot unfairly promote their own brands. It is likely that there will be a proviso preventing Lilly from gaining drug price information about competitors selling products through PCS. Industry observers also expect the FTC to introduce a right of prior approval concerning future mergers in which Lilly might be involved.