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

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