Hearst Charged With Medical Database Monopoly

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The Federal Trade Commission yesterday charged the Hearst Trust and two of its divisions with illegally acquiring a monopoly over a key type of drug information database used by pharmacists, other healthcare professionals, hospitals and health plans through a 1998 acquisition.


The FTC filed the complaint against the Hearst Trust, New York; its communications and entertainment company, The Hearst Corp.; and First DataBank, a wholly owned Hearst Corp. subsidiary, in U.S. District Court for the District of Columbia. The lawsuit alleges that Hearst's acquisition of its main competitor in that market, Medi-Span, violated the FTC Act by allowing Hearst to monopolize the market, resulting in drastic price increases for such databases.


The FTC asked the court to order Hearst to create a new competitor to replace Medi-Span and to forfeit its profits from the anti-competitive price increases that followed the Medi-Span acquisition.


"This acquisition eliminated First DataBank's only significant competitor," said Molly Boast, acting director of the FTC's bureau of competition. "The commission will move aggressively not only to restore competition to the market but also to deprive First DataBank of the monopoly profits it has enjoyed as a result of its grossly illegal conduct consisting of withholding key information in the pre-merger review process and buying its only competitor."


The complaint focuses on the market for electronic integratable drug information databases, also known as integratable drug data files. These databases contain comprehensive clinical and pricing information on prescription and nonprescription drugs in a form that can be integrated easily with other electronic databases, such as pharmacists' records of their patients' medications.


Pharmacists, physicians, hospital staff and health plans use integratable drug data files to help them provide cost-effective patient care. Most notably, integratable drug data files are needed for pharmacists to get quick, automatic warnings of any dangerous interactions between newly prescribed drugs and other drugs their patients are already taking. Pharmacists cannot get such automatic alerts using nonintegratable drug information such as reference books.


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