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In a letter issued today, the staff of the Federal Trade Commission advised Quest Analytics Group that its proposal to operate a GPO-based prescription drug program for the benefit of a group of non-profit schools, colleges, and universities would fall within the Non-Profit Institutions Act (NPIA). The NPIA provides an exemption for certain non-profit entities to the Robinson-Patman Act, a U.S. antitrust law that prohibits anticompetitive price discrimination.

The schools, colleges, and universities asked Quest to design a program to control the cost of providing specialty prescription drug coverage to employees and retirees, as well as  their dependents. In response to this request, Quest developed a program allowing its clients to access NPIA-discounted pharmaceutical pricing when it is the least expensive option.

The staff letter concludes that, consistent with Supreme Court and prior Commission precedent, the schools, colleges, and universities could purchase discounted specialty drugs through Quest’s proposed program without running afoul of the Robinson-Patman Act, because 1) the proposed program will benefit only non-profit entities eligible for the NPIA exemption, 2) the purchases appear to fit within the NPIA’s “own use” requirement, and 3) sufficient safeguards exist to ensure that no ineligible for-profit entity will benefit from the NPIA exemption.

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.”

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., N.W., 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.