FTC grants Coopharma authority to jointly negotiate with PBMs
The commission voted 5-0 to approve Coopharma’s petition to reopen and modify a 12-year-old order that prohibited the practice.
The Federal Trade Commission (FTC) has reopened and modified its 2012 consent order against Cooperativa de Farmacias Puertorriqueñas (Coopharma), allowing the pharmacy cooperative to engage in collective negotiations with insurers and pharmacy benefit managers (PBMs) under specific conditions.
The FTC unanimously voted 5-0 on Dec. 6 to approve Coopharma’s petition. Coopharma represents about 560 independent and community pharmacies across Puerto Rico.
The original 2012 order stemmed from allegations that Coopharma conspired with members to fix prices and coerce third-party payers through collective negotiations and boycotts. Under the order, Coopharma was barred from collective bargaining or facilitating price-related agreements among its members for 20 years.
Coopharma’s petition cited Puerto Rico’s Act 228 of 2015 and Regulation 9161, which explicitly permit health service cooperatives to negotiate collectively under state supervision. The regulation requires Coopharma to secure approval from the Puerto Rico Cooperatives Supervision & Insurance Corp. (Cossec, in Spanish) for its collective bargaining efforts.
The FTC found that Puerto Rico’s legal framework meets the criteria for state action immunity from federal antitrust laws, which require a clearly articulated state policy and active state supervision.
“We believe it was a mistaken interpretation of the law, because we operate under another law [Act 239 of 2004, or the Cooperative Societies Act] that gives us the authority to carry out these types of collective negotiations,” Coopharma President Heriberto Ortiz-Martínez told News is my Business.
While Coopharma has not yet quantified the economic harm of the FTC’s initial order over the community pharmacies for the past 12 years, “we have been able to calculate the disadvantage that the community pharmacy has had versus the chains, since they have the power to negotiate financial clauses that are different from the compensation that the community pharmacies receive,” Ortiz-Martínez said.
“So, if we’re going to evaluate this, it is practically a speculative way, because we don’t have precise statistical data, but we can see how every day the reimbursements to the pharmacies are reduced to the point that we have pharmacies closing, that don’t want to continue receiving below-cost compensation for their pharmaceutical products, or having unilateral adhesion contracts in which if they don’t sign, [the provider] sends a letter the next day to all the patients saying that the pharmacy doesn’t belong to the network because they did not accept their contract terms,” Ortiz-Martínez added.
Under the modified order, Coopharma may engage in collective negotiations if supervised by Cossec in compliance with Regulation 9161 and if it provides timely notice of its intent to negotiate to both Cossec and the FTC.
The FTC received several public comments regarding Coopharma’s petition. Supporters, including the Open Markets Institute and the Alliance of Health Provider Cooperatives, emphasized the importance of countering PBM market power to protect independent pharmacies and improve access to medicine.
Conversely, critics expressed concerns about potential consumer harm and questioned the adequacy of Puerto Rico’s regulatory oversight.
The FTC’s decision marks a turning point for independent pharmacies in Puerto Rico. Coopharma can now leverage collective bargaining to negotiate more favorable terms with PBMs and insurers.
The only critic was the attorney who was in charge of the investigation. His arguments show that he do not know the current market conditions were a PBM controls the whole medicaid market and most of the private insurance market, hence very limited competition. Also, no oversee from the Commission of said PBM market is known.