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F.T.C. Questions Bid to Spur Competition Between Drug Stores and Mail-Order Pharmacies

The Federal Trade Commission has issued an advisory opinion questioning a proposed New York State law intended to make it easier for neighborhood drug stores to compete with mail-order pharmacies.

The opinion was quietly released on Monday and has stirred up a storm of protest from local pharmacists, who contend that they can provide drugs as cheaply as, if not cheaper than, mail-order pharmacies do, while offering a higher level of customer service.

The bill, which has passed both houses of the State Legislature, prohibits insurance plans, with some exceptions, from requiring that their members get their drugs from a mail-order pharmacy. It also forbids the plans from requiring a co-payment for a prescription filled at a retail pharmacy if a similar fee is not required for a mail-order prescription.

Josh Vlasto, a spokesman for Gov. Andrew M. Cuomo, declined to comment on the bill, saying it had not yet reached the governor’s desk.

The trade commission often asks its staff to weigh in on matters that may affect competition, although in this case its advice would not be binding.

In its opinion, the commission staff said that mail-order pharmacies were typically less expensive for consumers and insurers than retail pharmacies are, especially for long-term prescriptions, like those for diabetes, cholesterol and blood pressure drugs. Restricting the mail-order pharmacies’ exclusivity under some plans, the opinion said, would drive up prices for consumers and might force some plans to limit drug coverage.

Mail-order companies often provide discounts in return for a promise that an insurance plan will provide a high volume of patients, the trade commission’s staff said, and if they were not assured of getting that business, they would not provide the favorable prices.

“Although the bill attempts to provide consumers with a choice among available pharmacy providers, it may have the unintended consequences of curtailing prescription drug coverage and increasing out-of-pocket payments,” said the opinion, signed by Richard A. Feinstein, director of the trade commission’s bureau of competition, and other staff members.

Ray Macioci, president of the New York City Pharmacists Society, said on Friday that independent pharmacies had been able to offer low prices as generic drugs had become more common. Drug plans negotiated by labor unions would be exempt from the law, said Craig Burridge, executive director of the Pharmacists Society of the State of New York, if the unions required members to use mail-order pharmacies as a way of saving money. The opinion also drew a sharp response from another trade group, the National Community Pharmacists Association, which wrote to the commission claiming that the bill would give consumers more choice and thus increase competition rather than reducing it.

The association’s letter said that mail-order pharmacy companies had become so powerful that they were driving up costs and driving small independent pharmacies out of business.

The letter from the trade commission staff said that more than a dozen states had adopted laws on pharmacies like the proposed New York law, but that preliminary evidence showed that those laws did not save consumers money.

A study in Maryland, the commission said, found that statutory barriers to filling prescriptions by mail order had made long-term drugs “very costly for a state and its citizens.”

The staff letter said that while the trade commission understood that the bill was trying to give consumers a choice of where to fill their prescriptions, it was concerned that it “impedes a fundamental prerequisite to consumer choice: healthy competition between retail and mail-order pharmacies, which constrains costs and maximizes access to prescription drugs.”

A version of this article appears in print on  , Section A, Page 17 of the New York edition with the headline: F.T.C. Questions Bid to Spur Competition Between Drug Stores and Mail-Order Pharmacies. Order Reprints | Today’s Paper | Subscribe

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