FTC Staff Comment to the Honorable James L. Seward Concerning New York Senate Bill 58 on Pharmacy Benefit Managers (PBMs)
us-ftc-advocacy-filings-2a92d39eaf2d7e9b08415c38c6dc3610FTC Staff Comment to the Honorable James L. Seward Concerning New York Senate Bill 58 on Pharmacy Benefit Managers (PBMs)Advocacy Filing
Matter Number
V090006
UNITEDSTATESOFAME~CA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of Policy Planning
Bureau of Economics
Bureau of Competition
March 31, 2009
Hon. James L. Seward
Senator, 51 st District
Legislative Office Building
Albany, NY 12247
Dear Senator Seward:
The staffs of the Federal Trade Commission's Office of Policy Planning, Bureau
of Competition, and Bureau of Economics1 are pleased to respond to your request for
comments on the likely competitive effects of the pharmacy benefit manager ("PBM")
related provisions of New York Senate Bill 58 ("SB-58" or "the Bill"), which would
regulate the contractual relationships between PBMs and health benefit plans ("health
plans,,).2 You asked the FTC to examine the Bill to determine "whether the proposed
legislation is anti-competitive and will likely result in the increased cost of
pharmaceutical care for consumers.,,3
We are concerned that SB-58, if enacted, may increase pharmaceutical prices and
may reduce the number of New York consumers with insurance coverage for
pharmaceuticals. The bill creates mandatory disclosures that PBMs must make to health
plans and, in some cases, doctors and imposes fiduciary-like duties on PBMs in their
relationships with health plans, all of which will increase the cost of the services PBMs
provide. At the same time, these added requirements are unlikely to generate many
I This letter expresses the views of the Federal Trade Commission's Office of Policy Planning, Bureau of
Competition, and Bureau of Economics. The letter does not necessarily represent the views of the Federal
Trade Commission (Commission) or of any individual Commissioner. The Commission has, however,
voted to authorize us to submit these comments.
2 PBMs contract with Health plans to manage the cost and quality of the plans' drug benefits. They act as
clearinghouses for health plans, covered individuals, and retail pharmacies, and may provide a variety of
related services. These include: 1) developing drug formularies and negotiating discounts and rebates
from drug companies in exchange for preferential placement in the formulary; 2) developing networks of
local pharmacies; 3) providing access to mail order pharmacies; 4) providing analysis of physician
prescribing patterns; and 5) providing treatment information and monitoring of covered individuals with
certain chronic diseases.
3 Letter from Hon. James L. Seward to James Cooper, Acting Director, Office of Policy Planning, Federal
Trade Commission (Jan. 26, 2009). This comment addresses SB-58, as requested, but staff notes that
parallel legislation has been introduced in the New York Assembly as AB-58.
Page 2 of 11
benefits. Although the bill attempts to eliminate perceived conflicts of interest (and some
lawsuits have challenged particular types of PBM conduct),4 empirical evidence suggests
that those conflicts of interest are not prevalent. Health plans are sophisticated
companies capable of preventing the conflicts of interest that the Bill attempts to address.
Indeed, the Commission's recent study of the PBM industry finds that health plans
protect themselves from potential conflicts of interest in arms-length contracts with
PBMs. 5
Interest and Experience of the Federal Trade Commission
Congress has charged the Federal Trade Commission ("FTC" or "Commission")
with preventing unfair methods of competition and unfair or deceptive acts or practices in
or affecting commerce. 6 Pursuant to its statutory mandate, the FTC seeks to identify
business practices and regulations that impede competition without offering
countervailing benefits to consumers. For several decades, the FTC and its staff have
investigated the competitive effects of restrictions on the business practices of health care
providers,? issued reports and studies regarding various aspects of the pharmaceuticals
industry, 8 and brought numerous enforcement actions against entities in that industry. 9
Of particular relevance is the Commission's "Conflict of Interest Study"
regarding PBM practices. In response to a request from Congress in 2003, the FTC
analyzed data on PBM pricing, generic substitution, therapeutic interchange, and
repackaging practices. The study examined whether PBM ownership of mail-order
pharmacies served to maximize competition and lower prescription drug prices for plan
sponsors. In its 2005 report based on the study ("PBM Study"), the FTC found, among
4 See, e.g., United States v. Merck-Medco Managed Care, L.L.c., Case No. 00-CV-737 (E.D. Penn. Dec. 9,
2003); In re Pharmaceutical Industry Wholesale Price Litig., MDL No. 1456, Civ. Act. No. 01-cv-12257-
PBS (D. Mass. 2002). Some complaints allege that failure to disclose or remit rebates either breached a
contractual requirement or breached an asserted duty to disclose or remit rebates under some other existing
law. See, e.g., New York v. Express Scripts, Inc. (N.Y. Sup. Ct. Aug. 4, 2002). Because these duties to
disclose or remit rebates allegedly arise under existing legal obligations, it is unclear how SB-58's
additional legal requirements that, e.g., PBMs disclose sensitive financial information to various parties are
likely to serve as direct or effective means of improving compliance with the existing obligations that have
been subject to legal controversy.
5 See generally Federal Trade Commission, PHARMACY BENEFIT MANAGERS: OWNERSHIP OF MAIL-ORDER
PHARMACIES (Aug. 2005) ("PBM STUDY"), available at
http://www.ftc.gov/reports/pharmbenefit05/050906pharmbenefitrot.pdf.
6 Federal Trade Commission Act, 15 U.S.C. § 45.
7 See Federal Trade Commission, FTC Antitrust Actions in Health Care Services and Products (Oct. 2003),
available at http://www.ftc.gov/bc/hcupdate031024.pdf.
8 See Federal Trade Commission, GENERIC DRUG ENTRY PRIOR TO PATENT EXPIRATION (July 2002);
DAVID REIFFEN AND MICHAEL R. WARD, GENERIC DRUG INDUSTRY DYNAMICS, Federal Trade
Commission Bureau of Economics Working Paper No. 248 (Feb. 2002), available at
http://www.ftc.gov/be/econwork.htm.
9 See Federal Trade Commission, FTC Antitrust Actions in Pharmaceutical Services and Products (Oct.
2005), available at http://www.ftc.gov/bc/031Orxupdate.pdf.
Page 3 of 11
other things, that competition affords health plans substantial tools with which to
safeguard their interests. lO
This study continued the FTC's ongoing experience with PBMs. PBM practices
were a particular focus of hearings on health care markets jointly conducted by the FTC
and the Department of Justice Antitrust Division ("DOJ") in 2003 ("Health Care
Hearings,,).11 In 2004, the FTC and DOJ issued a report based on the hearings, a
Commission-sponsored workshop, and independent research. 12 The FTC investigated the
competitive implications of a proposed merger between two PBMs, Caremark and
AdvancePCS. I In addition, FTC staff have analyzed and commented on proposed PBM
legislation in several states. I4
Likely Effects of SB-58
Several provisions of the Bill could be read in ways harmful to competition and
consumers. First, mandatory disclosures of PBM business information to health plans
may excessively restrict the abilities of PBMs and health plans to negotiate efficient,
mutually advantageous contracts. To the extent that mandatory disclosures may increase
the risk that sensitive business information becomes public, they may also facilitate
collusion among third parties. Second, mandatory disclosures to physicians may be
overbroad, and open-ended requirements that PBMs disclose financial information to
physicians may chill the implementation of cost-saving drug interchange programs.
Third, the general duties of PBMs described in the Bill are unclear and may suggest
significant and costly risks, including forms of liability beyond those contemplated under
contract law or health regulations. Collectively, these requirements may increase the
prices that health plans, and ultimately New York consumers, pay for pharmaceuticals.
(a) Disclosures to Health Plans
SB-58 would require a PBM to make substantial disclosures to a health plan
during contract negotiations, both before entering into an initial contract and annually
thereafter. I5 These disclosures include extensive details of the PBM' s underlying cost
10 PBM STUDY, supra note 5 at 58 (noting diverse audit rights and reporting under PBM contracts).
11 See Hearings on Health Care and Competition Law and Policy, June 26, 2003, available at
http://www.ftc.gov/ogc/healthcarehearings/030626ftctrans.pdf. ("Health Care Hearings") Subsequent
references to the hearings will identify a panelist, affiliation (as of hearing date), and transcript page.
12 See FEDERAL TRADE COMMISSION AND DEPAR1MENT OF JUSTICE, IMPROVING HEALTH CARE: A DOSE OF
COMPETITION (2004), available at http://www.ftc. gov/reports/healthcare/040723healthcarerpt.pdf.
13 Statement of the Federal Trade Commission, In re Caremark Rx, Inc./AdvancePCS, File No. 0310239
(Feb. II, 2004), available at http://www.ftc.gov/os/caselist/031 0239/040211 ftcstatement031 0239.pdf. The
Commission closed the investigation because it concluded that the transaction was unlikely to reduce
competition.
14 See, e.g., Letter from FTC staff to New Jersey Assemblywoman Nellie Pou (Apr. 17, 2007), available at
http://www.ftc.govlbeN060019.pdf; Letter from FTC staff to Virginia Delegate Terry G. Kilgore (Oct. 2,
2006), available at http://www.ftc.govlbeN060018.pdf..
15 See generally SB-58 at § 4453.
Page 4 of 11 structure and business strategies. For example, under SB-58, before entering into a contract with a health plan, a PBM must disclose not only "all the goods and services it offers to provide the health plan" but "the net cost for each such service or goOd.,,16 Before entering into a contract, and periodically thereafter, a PBM must disclose "the content of all contracts and other agreements it directly or indirectly has with, and all payments it receives from a drug manufacturer ... or other third party in connection with any [PBM] service it provides to the health plan.,,17 Quarterly disclosures must include, for example, not just actual conflicts of interest but "every activity, policy or practice of the [PBM] that directly or indirectly presents any actual or potential conflict of interest with the health plan"; quarterly disclosures must also include "any increase in the dispensing fee paid to any pharmacy and the reason for such increase" (independent of the question whether the increase is passed on to the health plan). 18 The Department of Health is given broad latitude to "promulgate regulations that set out the nature, content and format of the disclosures required.,,19 (1) Potential Harms to Consumers Staff's two principal concerns about the disclosure provisions are these: first, they may increase the cost of the PBM's services because it will preclude health plans and PBMs from entering into efficient (i.e., cost-effective) contracts for the administration of pharmacy benefits; and second, they may have the unintended consequence of publicizing proprietary business information in a way that could foster collusion among third parties. As to the first of these concerns, if the health plan and PBM both prefer and, in the absence of the legislation, would agree to different disclosure and audit terms than those mandated by SB-58, the bill may impose costs on both parties.z° Health plans appear to have diverse business interests in disclosures and audit rights, because individual plans tend to negotiate for very different disclosure and audit terms in different circumstances. 21 Hence, the bill by imposing unneeded and unwanted disclosures will increase health care costs, and such costs may be reflected in the price of drug plans that health plans are able to offer New York health care consumers, the scope of coverage consumers receive under such plans, or the number of consumers who have access to such coverage. 22 16 Id . at § 4453(2)(A). 17Id. at § 4453(2), (3). 18 Id . 19 Id . at § 4453(5). 20 It is not that any particular set of PBM disclosures to a health plan provides an ideal competitive model that is inconsistent with SB-58, but its imposition of disclosures that health plans may neither want nor need that is problem. In addition to any direct costs imposed, mandatory disclosures would limit a health plan's ability to bargain over various disclosure terms in the interest of other contract terms that may be more important to its particular business interests. 21 PBM Study, supra note 5 at 58. 22 In addition to costs that may be entailed by specific restrictions on established preferred contract terms, health plans and PBMs may be concerned that numerous statutory restrictions on their ability to contract freely will harm their ability to develop and test innovations in this relatively new marketplace. See, e.g.,
Page 5 of 11
In addition - discussed in more detail below - ambiguous language in the Bill's
confidentiality provisions may undermine their effectiveness. Although SB-58 provides
confidentiality protections for some information disclosed to health plans, the scope of
those protections is unclear. To the extent that confidentiality provisions in the Bill are
inadequate, they may permit the broader disclosure of sensitive financial information,
which may, in tum, facilitate collusion, raise prices, and harm the patients the Bill is
supposed to protect. If, for example, pharmaceutical manufacturers know the precise
details of rebate arrangements offered by their competitors, then tacit collusion among
them may be more feasible. 23 Absent such knowledge, manufacturers have powerful
incentives to bid aggressively for formulary position, because preferential formulary
treatment may yield increased sales. Unprotected disclosures thus may raise the price
that New York consumers pay for pharmaceutical coverage by undermining competition
among pharmaceutical companies for preferred formulary treatment.
Consumers need accurate information on price and quality to make efficient
purchasing decisions. For this reason, the FTC has challenged collusive attempts to
suppress price information for consumers 24 and has opposed government regulation that
restricts advertising to consumers. 25 Pharmaceutical payments PBMs receive from
manufacturers, however, are just one factor among many that determine PBM pricing -
in essence, the payments function as manufacturer discounts on the cost of drug products.
Neil Model, PBM transparency: More than meets the eye, Employee Benefit News (Nov. 2006), available
at http://www.benefitnews.com/detaiI.cfm?id=9740 (new contract provisions addressing pass-through
pricing and disclosure and possible advantages and disadvantages to exploring different contract options).
Finally, some PBMs may curtail or terminate services offered in N.Y., especially as some of the
information that they would have to disclose is not state-specific.
23 Economists have long understood that when oligopolists share information on transaction prices and
other competitively sensitive vairables, it makes coordination among rivals more likely. See Kai-Uwe
Kuhn, Fighting Collusion: Regulation of Communication Between Firms, 16 ECON. POLICY. 169,170
(2001) ("The notion that communication is central to collusion is without doubt part of the general folklore
of competition policy at least going back to Adam Smith."); Svend Albaek, Peter M6llgaard, & Per B.
Overgaard, Government-Assisted Oligopoly Coordination? A Concrete Case, 45 J. INDUS. ECON. 429, 430
(1997) ("At least since Stigler's seminal article, [industrial organization] literature has stressed the
importance for (tacitly) colluding oligopolists of observing firm-specific transactions prices of their rivals
and rapidly detecting changes in these. Otherwise, collusion is prone to break down."). Several empirical
studies have shown transparency policies to be associated with higher prices. See Stephen W. Fuller et aI.,
Effect of Disclosure on Price: Railroad Grain Contracting in the Plains, 15 W. J. AGRICULTURAL ECON.
265 (1990); see also Maura P. Doyle & Christopher M. Snyder, Information Sharing and Competition in
the Motor Vehicle Industry, 107 J. Pol. Econ. 1326 (1999) (finding evidence that automakers respond
strategically to production announcements by rivals).
24 See, e.g., Fair Allocation System, Inc., FTC Docket No. C-3832 (1998) (consent order) (challenging
concerted action by auto dealers to restrict a competing dealer's ability to advertise over the Internet); see
also FTC v. Indiana Fed'n of Dentists, 476 U.S. 447 (1986) (challenging a dental association rule that
prohibited dentists from submitting x-rays to dental insurers in connections with claims forms).
25 See, e.g., Massachusetts Bd. of Registration of Optometry, 110 FTC. 549 (1988); FTC Staff Comments
in the Matter of Request for Comments on Agency Draft Guidance Documents Regarding Consumer-
Directed Promotion, Before the FDA, Docket No. 2004D-0042 (May 10,2004), available at
http://www.ftc. gOv/osI2004/05/040512dtcdrugscomment.pdf.
Page 6 of 11
Thus, the disclosure requirements are analogous to requirements that firms reveal aspects
of their cost structures to customers. There is no theoretical or empirical reason to
assume that consumers require sellers' underlying cost information for markets to
achieve competitive outcomes
(2) Undemonstrated Need
Although sometimes mandatory disclosures of price and quality information can
improve how markets function - arid the Commission enforces several rules that require
sellers to disclose this type of information - health plans do not need them. 26 Although a
few lawsuits have challenged particular types of PBM conduct,27 empirical evidence
suggests that the conflicts of interest that the Bill attempts to address are not prevalent.
In addition, the Commission's analysis ofPBMlhealth plan contracts in its PBM STUDY
shows that health plans already are able to negotiate contract terms - including diverse
disclosure and audit rights - that protect them from conflicts of interest. 28 Press reports
too suggest that many contracts provide for full disclosure to client health plans. 29
Allowing competition among PBMs is more likely to yield efficient levels of payment
sharing, disclosure, and price than contract terms mandated by government regulation.
(3) Confidentiality Provisions are Unclear and Potentially Inadequate
Although SB-58 provides confidentiality protections for some information
disclosed to health plans, the scope of those protections is unclear. To the extent that
confidentiality provisions in the Bill are inadequate, they may permit the broader
disclosure of sensitive financial information, which may, in tum, facilitate collusion, raise
prices, and harm the patients the Bill is supposed to protect.
Under SB-58 a PBM is required to make certain disclosures to health plans, but
"may designate information it discloses to a health plan as confidential, and the health
plan shall not re-disclose such information to other entities," except in certain
circumstances.3D Among other possible exceptions, "with respect to documents disclosed
to a health plan that are subject to article six of the public officers law, the [PBM] shall
26 See, e.g., 16 CPR Part 453 ("Funeral Rule," requiring disclosure to consumers of an accurate itemized
"General Price List" that they can keep and that includes the prices for the commonly used funeral goods
and services the funeral home offers); 16 CPR Part 436 ("Franchise Rule," requiring certain disclosures in
connection with "the advertising, offering, licensing, contracting, sale, or other promotion in or affecting commerce .
. . of any franchise, or any relationship which is represented either orally or in writing to be a franchise.") In addition,
as noted above, the Commission has opposed artificial restrictions on commercial information available to
consumers. See, e.g., supra notes 24-25, and accompanying text.
27 See supra note 4.
28 See PBM STUDY, supra note 5, at 58.
29 See, e.g., Milt Freudenheim, Employers Unite in an Effort to Curb Prescription Drug Costs, N.Y. Times,
Feb. 3, 2005; Milt Freudenheim, Big Employers Join Forces in Effort to Negotiate Lower Drug Prices,
N.Y. TIMES, June 12,2004.
30 SB-58 at § 4453(1).
Page 7 of 11 not designate as 'confidential' any document to which the public would have broad access under said law, and the provisions of article six of the public officers law shall apply to the documents disclosed to such health plan.,,31 Article six of the New York Public Officers Law, known as the "Freedom of Information Law,,,32 includes a legislative declaration that the people have a "right to know the process of government decision-making," and that "access to [pertinent information] should not be thwarted by shrouding it with the cloak of secrecy or confidentiality.,,33 As a general requirement, subject to certain exceptions, every state agency "shall ... make available for public inspection and copying all records.,,34 Staff believes that the interaction between the general disclosure requirements of SB-58 and FOIL is unclear and raises concerns about the extent to which a PBM can designate as confidential its proprietary business information. Although FOIL does provide that an agency may deny access to certain records or portions thereof if those records pertain to a competitive enterprise and "if disclosed would cause substantial injury to the competitive position of the competitive enterprise,,,35 certain concerns remain. First, the Bill could render a PBM' s private and proprietary business information subject to public inspection via the Department of Health, under FOIL. That concern is bolstered by (1) the background presumption in favour of disclosure, (2) the full range of PBM business information available to the Department of Health, and (3) the lack of clarity in the law as to specific types of business information that will not be made public because, in the judgment of the Department, disclosure "would cause substantial injury to the competitive position of the [PBM] .,,36 Second, to the extent that the scope of public access to PBM business information under FOIL may be unclear, and given that a PBM may not designate as confidential "any document to which the public would have broad access under [FOIL]," a PBM simply may not know what business information it is able to designate as confidential under SB-58. (b) Disclosures to Physicians Required PBM disclosures to physicians under the Bill appear to be overbroad. In addition, open-ended requirements that PBMs disclose financial information to physicians may be unduly costly and a risk to the confidentiality of proprietary business information. As such, the requirements may chill the implementation of cost-saving drug 31/d. In addition, the "applicability of article six of the public officers law to a health plan's records does not affect the [PBM's] obligation under this article to disclose documents to the health plan." [d. 32 NY CLS Pub a § 85 (2008). 33 [d. at § 84. 34 [d. at § 87(2). The reference to FOIL Law raises two questions: (1) what is the information that PBMs must disclose to health plans that PBMs cannot designate as confidential? And (2) what PBM business information may be open to public inspection under FOIL in any case? 35 [d. 36 As previously noted, public disclosure of a PBM's private and proprietary business information may facilitate tacit collusion among drug manufacturers, resulting in higher drug prices and harming consumers.
Page 8 of 11 interchange programs. SB-58 places certain restrictions on drug substitutions used under some PBM/health plan contracts to lower overall costs of drug benefits by increasing the use of lower cost, therapeutically effective drugs.37 When a "drug switch" is requested, the PBM must "provide the prescriber with all of the financial and clinical information the prescriber needs to determine whether the drug switch is in the patient's best interest. ,,38 As drafted, the provision is vague and potentially over-broad. The FTC staff does not mean to express any opinion on the clinical considerations a prescribing physician should undertake prior to the issuance of a lawful prescription or in evaluating any amendment to that prescription. At the same time, the staff notes that "all of the financial and clinical information" that may be pertinent to a patient's best interests includes, on its face, non- clinical financial information. The scope of that required disclosure is unclear. That lack of clarity, and potential concerns about the disclosure of proprietary financial information to physicians who are not required to maintain that information in confidence, may work to chill otherwise cost-effective interchange programs. To the extent that SB-58 reduces the incidence of cost-saving substitution, it will increase pharmaceutical costs for health plans. Therapeutic interchange programs have the potential to increase usage of less expensive, but therapeutically effective, branded drugs or their generic equivalents. 39 The PBM Study noted that interchange pro.§rams are costly to implement and that, in practice, interchanges have been relatively rare. 0 Nonetheless, the Study data confirm that, if implemented, interchange programs should tend to reduce costs for health plan sponsors that use them. 41 Furthermore, interchange programs can playa useful role in the negotiation of discounts with manufacturers. 42 (c) General Duties 37 Therapeutic interchange is the substitution of a drug that is designed to have similar therapeutic effects, and is approved by FDA for treatment of the same indication, but is in some regard pharmaceutically different. See R. Herdman & D. Blumenthal, eds., Description and Analysis of the VA National Formulary (Institute of Medicine June 2000), available at www.nap.edulbooks/0309069866/html. Certain instances of therapeutic interchange are likely to be considered drug switches under SB-58. 38 SB-58 at § 4454. 39 See, e.g., PBM STUDY, supra note 5, at 28, Fig. II-2, and 61. 40 Two large PBMs submitting data for the PBM STUDY under special orders employed therapeutic interchange in filling "less than one-half of one percent (0.5%) of prescriptions dispensed at retail and at PBMs' owned mail-order pharmacies." Id. at 84. The data represent the practices of two large PBMs in 2002 and 2003 and may not represent the frequency of therapeutic interchange across the industry. See id. 41 See id. at 81. Examining data regarding drug pairs for which PBMs had authorized a program to substitute (interchange) one member of the pair for the other provides some indication of the potential for therapeutic interchange to lower costs if implemented. "In the 10 therapeutic categories the Commission examined, study participants' data showed that the use ofT! could reduce plan sponsors' costs in a majority of cases." Id. 42 The PBM STUDY reports that "[o]ne PBM indicated that it regards the real value of [therapeutic interchange] programs as a negotiating tool with manufacturers to obtain higher pharmaceutical payments or allowance rates." PBM STUDY, supra note 5, at 84.
Page 9 of 11 Among the proposed general obligations of a PBM are that it perform, "in connection with [PBM] services it provides to a health plan or participants in the state with care, skill, prudence, and diligence.,,43 These duties are not defined in the Bill, and without further clarification, they may suggest PBM liability for civil actions sounding in torts or agency, above and beyond any potential liability established under contract law. In particular, the suite of duties enumerated in SB-58 - "care, skill, prudence, and diligence" - may suggest an agency relationship, such as a fiduciary relationship, between PBMs and health plans, as these are traditional fiduciary duties of service or performance.44 Moreover, the Bill's language is similar to the federal ERISA statute's definition of fiduciary duties. 45 If the duties are read as fiduciary duties, they may further restrict the formation and interpretation of contracts in this area because, although a fiduciary relationship generally may be defined by the terms of a contract between the fiduciary and its principal, "even specific agreements ... must be interpreted in the light of the principles which are applicable to the relation of principal and agent.,,46 A fiduciary may, for example, owe its principal a "duty to give information" that is independent of any express disclosure requirements imposed under contract or statute, as well as a "duty to account for profits" that may require the pass-through of payments to the principal. 47 As noted above, our analysis of PBMlhealth plan contracts shows that health plans already are able to negotiate diverse payment terms - which sometimes include the pass-through of pharmaceutical payments - and diverse information disclosure and audit 43 N.Y. S.B. 58, § 4452. 44 See, e.g., REsTATEMENT (THIRD) OF AGENCY § 8.08 (duties of care, competence, and diligence among duties of performance); J. Dennis Hynes, Freedom of Contract, Fiduciary Duties, and Partnerships: The Bargain Principle and the Law of Agency, 54 WASH. & LEE L. REv. 439, 443 (1997). 45 29 USC l104(a)(1)(B) (fiduciary "shall discharge his duties with respect to a plan ... with ... care, skill, prudence, and diligence"). The Supreme Court has observed that, "rather than explicitly enumerating all of the powers and duties of trusties and other fiduciaries, Congress invoked the common law of trusts to define the general scope of their authority and responsibility." Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc.,472 US 559, 570 (1985). The Court further observed that the statutory duties of "care, skill, prudence, and diligence" were required under the traditional fiduciary duty of care at common law. [d. at 571. FTC staff does not suggest that the Bill seeks to alter the meaning or application of the federal ERISA statute - the Bill expressly disclaims alteration of certain fiduciary relationships established under ERISA. SB-58 at § 4451. 46 RESTATEMENT (SECOND) OF AGENCY, at Chapter 13, introductory note; see also, e.g., Ulico Casualty Co. v. Wilson, 56 A.D.3d 1 (N.Y. App. Div. 2008) (because attorney is fiduciary, his "obligations transcend those prevailing in the commercial market place, and a firm may not circumscribe its professional obligations by purporting to transform [the relationship] into an arm's length commercial affiliation." [d. at 5 (citations omitted)) .. 47 See, e.g., The Bank of New York AS TRUSTEE FOR THE CERTIFICATEHOLDERS CW ABS, INC. ASSET-BACKED CERTIFICATES SERIES 2006-22 v. Cremston Myers, 2009 N.Y. Slip Op 50159U, [*3] (Feb. 3,2009) (agent as fiduciary must "account to his principal for secret profits" and forfeits right to compensation for services rendered he violates fiduciary duty of loyalty); RESTATEMENT (THIRD) OF AGENCY §§ 8.02 (material benefit arising out of position) and 8.11 (duty to give information).
