OBJECTIVES: When we come to examine the possibility of cooperation between a pharmaceutical company and a not-for-profit HMO for a clinical project, the conflict of interests appears too obvious and substantial. A less restrictive view might illuminate the possibility of using each body's relative advantages, channeling them towards a common goal (using a proper contract), and thus maximizing each firm's utility as well as society's. The objective of this work was to examine the ability of implementing such cooperation, and its outcomes. METHODS: "Teva Pharmaceutical Industries LTD" and "Maccabi Healthcare Services" cooperated in an asthma disease management program in Israel. In order to overcome conceptual obstacles, the firms' managements had a three-day workshop, organized by a neutral professional company. The two managements became familiar with each other, learnt about each firm's structure, capabilities and relative advantages, learnt about possible cooperation contracts and gained the will to examine a cooperative disease management program. The contract between Teva and Maccabi ensured that neither firm's interests would be jeopardized and that each firms resources would be rationally allocated in order to improve asthma treatment and overcome problems such as supply-induced demand and cream skimming. RESULTS: Clinical parameters of asthma treatment were improved. Preventive treatment with steroids inhalers was increased (from 25% of prescriptions to 33%), and numbers of visits to the ER and hospitalizations were decreased (from 89 and 75 annually to 56 and 55 respectively). Average total cost per patient was reduced from 3365 NIS annually to 3182 NIS. Patients and physicians, as well as managements, expressed great satisfaction with the program. CONCLUSIONS: Cooperation between a pharmaceutical company and a not-for-profit HMO is beneficial. It is another step towards horizontal integration required for a higher quality managed care system. Such cooperation could yield greater utility to each firm and to society.