Robinson-Patman update: De Modena v. Kaiser Foundation Health Plan

The findings in a case dealing with price differentials for drugs purchased for members of a health maintenance organization (HMO) are presented. In the case of De Modena v. Kaiser Foundation Health Plan, community pharmacists in California and Oregon claimed that sales of drugs purchased at special prices by Kaiser-Permanente Medical Care Program for its members constituted price discrimination as interpreted by the United States Supreme Court decision in Abbott Laboratories et al. v. Portland Retail Druggists Association, Inc. A United States Court of Appeals ruled in favor of Kaiser, holding that the HMO was purchasing drugs for its "own use" and thus qualified for exemption from the provisions of the Robinson-Patman Antidiscrimination Act. The implications of this decision are discussed in light of corporate restructuring and diversification of services by hospitals. Evaluation of the overall health-care mission of a health-care organization rather than strict application of the Portland decision may be used to identify permissible uses of drugs purchased at special prices by these organizations.