Editor’s Note: The article below is the second in our three-part series, Federal Antitrust Enforcement in Health Care: 2023 Year in Review. (Click here to read part 1 and here to read part 2.) The series is based on our recent webinar, 2023 Health Care Enforcement Trends: Spotlight on Consumer Protection, Antitrust and Fraud. Click here to view the free webinar on demand.
In 2023, the DOJ continued its aggressive criminal antitrust enforcement agenda in health care, with mixed results in labor markets. In speeches, the DOJ asserted that its commitment to labor market cases has not diminished, despite some losses. The FTC and DOJ also brought—and resolved—a number of civil actions based on alleged anticompetitive conduct. Finally, the FTC and DOJ withdrew long-standing antitrust guidance to the health care industry without replacing it. The agencies, however, did introduce new merger guidelines to help fill the policy void.
Health care industry participants should expect aggressive antitrust enforcement to remain the norm in 2024, with an uptick on the enforcement agenda as the FTC and DOJ seek to establish citable precedent with their new Merger Guidelines in litigated cases.
Criminal Enforcement
Wage fixing. In March 2023, the DOJ brought a criminal indictment alleging that a health care staffing executive conspired to fix the wages of nurses employed by Las Vegas area home health agencies.1 In September 2023, a superseding indictment added a charge of wire fraud, alleging that the defendant concealed his wage-fixing conspiracy so that he could sell his company for over $10 million.2
In March 2023, the DOJ lost a wage-fixing case when a federal jury in the District of Maine acquitted four business managers of conspiring to fix hourly rates for home health care workers.3
No poach. After failing to secure a conviction in its criminal case against kidney dialysis company DaVita and its former CEO, in November 2023 the DOJ dropped its prosecution of DaVita’s alleged co-conspirator Surgical Care Affiliates for allegedly agreeing not to hire away each other’s employees.4
Oncology market allocation. In August 2023, a Florida oncologist pled guilty to involvement in a 16 year conspiracy to allocate the markets for chemotherapy and radiation treatments for cancer patients in southwest Florida.5 His oncology group had previously entered into a deferred prosecution agreement and paid a $100 million fine for market allocation in the oncology industry.6 In November 2023, the 70 year-old retired doctor was sentenced to probation, a $50,000 fine and community service.7
Conduct Actions
Surescripts. In July 2023, the FTC resolved its lawsuit against health information technology company Surescripts claiming that it had monopolized two electronic prescription drug markets.8 The FTC entered into a 20-year injunction with Surescripts prohibiting the company from using certain terms in existing or future customer contracts, including exclusivity, non-compete or loyalty programs.9 Surescripts also agreed to eliminate employee non-compete agreements and create an antitrust compliance program.10 The district court entered the stipulated injunction in August 2023.11
Endo/Impax. In August 2023, the FTC lost the appeal of its reverse payment case against two pharmaceutical companies, Endo and Impax, based on their 2017 patent litigation settlement agreement.12 The FTC claimed that Impax’s paying Endo not to enter the market with a competing pain medication to Impax’s product violated the antitrust laws, but the D.C. Circuit held that “a patent holder’s grant of an exclusive license to a potential competitor in exchange for payment of a royalty generally raises no issue under the antitrust laws.”13
Policy Guidance
In February 2023, the Antitrust Division withdrew the 1993 Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area, the 1996 Statements of Antitrust Enforcement Policy in Health Care, and the 2011 Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.14 In July 2023, the FTC rescinded the same statements.15 In July 2023, the FTC also withdrew prior pharmacy benefit manager advocacy statements and studies.16 Given the FTC’s ongoing study of the PBM industry, the FTC cautioned against reliance on its prior statements on PBMs from 2004 to 2014, as well as a 2004 joint report with the DOJ and a 2005 FTC study.17
In December 2023, the DOJ and FTC released their final Merger Guidelines, which identify how they will investigate and challenge proposed horizontal and vertical mergers, as well as partial acquisitions and consummated mergers, as antitrust law violations going forward.18
If adopted by courts in merger litigation brought by the antitrust agencies, the 2023 Guidelines will erect obstacles to provider and payer consolidation in concentrated markets. For example, in their discussion of cluster markets, the 2023 Guidelines give the example that “competing hospitals may each provide a wide range of acute health care services” and noted that while “[a]cute care for one health issue is not a substitute for acute care for a different health issue,” the agencies may nevertheless “aggregate them into a cluster market for acute care services if the conditions of competition are reasonably similar across the services in the cluster.”19 In a cluster market of different acute care services, “market shares will typically be calculated for the cluster market as a whole.”20 This would make it easier for the agencies to establish the thresholds needed to secure a structural presumption of anticompetitive effects (and win a Clayton Act Section 7 challenge).
Conclusion
While it would appear hard to top 2023 for antitrust enforcement activity in health care, 2024 is shaping up to be just as busy.
On the FTC side, market observers predict hospital merger activity to increase.21 The FTC has to decide on the $25 billion Kroger/Albertson merger, which some critics claim will create pharmacy deserts.22 In addition, there are several large pharmaceutical mergers pending, including the $10.1 billion AbbVie/ImmunoGen oncology deal announced in November 2023, and the $8.7 billion AbbVie/Cerevel neuroscience transaction announced in December 2023.23
Moreover, the FTC’s announcement of a proposed rule to ban employers from enforcing employee non-compete agreements (and rescinding all existing non-compete agreements) will reportedly be finalized in April 2024.24 The FTC’s report on the proposed rule stated that “with respect to consumer prices in the health care sector alone, the Commission estimates health spending would decrease by $148 billion annually due to the proposed rule.”25
On the DOJ docket, the Antitrust Division issued a Second Request in UnitedHealth’s proposed $3.3 billion acquisition of home health and hospice provider Amedisys.26 Trial in the criminal case for wage-fixing of Las Vegas nurses is scheduled for March 2024.
1 Press Release, Dep’t of Justice, Health Care Staffing Executive Indicted for Fixing Wages of Nurses (Mar. 16, 2023), available at https://www.justice.gov/opa/pr/health-care-staffing-executive-indicted-fixing-wages-nurses.
2 Press Release, Dep’t of Justice, Fraud Charges Added Against Health Care Staffing Executive in Las Vegas (Sept. 7, 2023), available at https://www.justice.gov/opa/pr/fraud-charges-added-against-health-care-staffing-executive-las-vegas.
3 Jury Verdict Form, Dkt. 247, U.S. v. Manahe, No. 2:22-cr-00013 (D. Me. Mar. 22, 2023); Dennis Hoey, Four men acquitted on charge of conspiring to fix wages for their workers, Portland Press Herald (Mar. 24, 2023), available at https://www.pressherald.com/2023/03/23/four-men-acquitted-on-charge-of-conspiring-to-fix-wages-for-their-health-care-workers/.
4 United States’ Motion to Dismiss, U.S. v. Surgical Care Affiliates, LLC, No. 3-21-cr-00011 (N.D. Tex. Nov. 13, 2023).
5 Press Release, Dep’t of Justice, Doctor Pleads Guilty to Role in Antitrust Conspiracy That Limited Cancer Patients’ Options for Life Saving Care in Southwest Florida (Aug. 24, 2023), available at https://www.justice.gov/opa/pr/doctor-pleads-guilty-role-antitrust-conspiracy-limited-cancer-patients-options-life-saving.
6 Press Release, Dep’t of Justice, Leading Cancer Treatment Center Admits to Antitrust Crime and Agrees to Pay $100 Million Criminal Penalty (Apr. 30, 2020), available at https://www.justice.gov/opa/pr/leading-cancer-treatment-center-admits-antitrust-crime-and-agrees-pay-100-million-criminal.
7 Sentencing, Dkt. 368, U.S. v. Harwin, No. 2:20-cr-00115 (M.D. Fla. Nov. 21, 2023).
8 Press Release, Fed. Trade Comm’n, FTC Reaches Proposed Settlement with Surescripts in Illegal Monopolization Case (July 27, 2023), available at https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-reaches-proposed-settlement-surescripts-illegal-monopolization-case.
9 See Stipulated Order for Permanent Injunction and Equitable Relief at 5-6, FTC v. Surescripts, LLC, No. 1:19-cv-01080 (D.D.C. July 27, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/1410210-Surescripts-Order.pdf.
10 See id. at 6-8.
11 See Stipulated Order for Permanent Injunction and Equitable Relief, FTC v. Surescripts, LLC, No. 1:19-cv-01080 (D.D.C. Aug. 9, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/surescriptsstipulatedorder.pdf.
12 FTC v. Endo Pharmaceuticals, Inc., 82 F.4th 1196, 1204 (D.C. Cir. Aug. 25, 2023), available at https://www.cadc.uscourts.gov/internet/opinions.nsf/7266A7A34989745385258A16004DE6EF/$file/22-5137-2014110.pdf (“a valid patent holder’s grant of a nearly exclusive license to a single potential competitor in exchange for royalty payments [does not] violate antitrust law when that nearly exclusive license restrains trade only to an extent traditionally recognized by patent law as reasonable”).
13 See id. at 1205.
14 Press Release, Dep’t of Justice, Justice Department Withdraws Outdated Enforcement Policy Statements (Feb. 3, 2023), available at https://www.justice.gov/opa/pr/justice-department-withdraws-outdated-enforcement-policy-statements.
15 Press Release, Fed. Trade Comm’n, Federal Trade Commission Withdraws Health Care Enforcement Policy Statements (July 14, 2023), available at https://www.ftc.gov/news-events/news/press-releases/2023/07/federal-trade-commission-withdraws-health-care-enforcement-policy-statements.
16 Press Release, Fed. Trade Comm’n, FTC Votes to Issue Statement Withdrawing Prior Pharmacy Benefit Manager Advocacy (July 20, 2023), available at https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-votes-issue-statement-withdrawing-prior-pharmacy-benefit-manager-advocacy.
17 See Statement, Fed. Trade Comm’n, Federal Trade Commission Statement Concerning Reliance on Prior PBM-Related Advocacy Statements and Reports That No Longer Reflect Current Market Realities (July 20, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/CLEANPBMStatement7182023%28OPPFinalRevisionsnoon%29.pdf; see also Press Release, Fed. Trade Comm’n, FTC Launches Inquiry Into Prescription Drug Middlemen Industry (June 7, 2022), available at https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-launches-inquiry-prescription-drug-middlemen-industry.
18 FTC and DOJ, Merger Guidelines (Dec. 18, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/2023_merger_guidelines_final_12.18.2023.pdf.
19 Id. at 46-47.
20 Id. at 47.
21 Alex Kacik, Hospital merger activity to increase in 2024, Modern Healthcare (Dec. 26, 2023), available at https://www.modernhealthcare.com/mergers-acquisitions/hospital-merger-activity-continue-rise-2024.
22 Diane Bartz, California probes 'pharmacy deserts' in Kroger's Albertsons deal-sources, Reuters (Aug. 18, 2023), available at https://www.reuters.com/markets/deals/california-probes-pharmacy-deserts-krogers-albertsons-deal-sources-2023-08-18/; Krista Brown, American Econ. Liberties Project, Supermarket Squeeze: The Real Costs of the Kroger-Albertsons Deal (Nov. 14, 2023), available at https://www.economicliberties.us/our-work/supermarket-squeeze/.
23 Press Release, AbbVie, AbbVie to Acquire ImmunoGen, including its Flagship Cancer Therapy ELAHERE® (mirvetuximab soravtansine-gynx), Expanding Solid Tumor Portfolio (Nov. 30, 2023), available at https://news.abbvie.com/2023-11-30-AbbVie-to-Acquire-ImmunoGen,-including-its-Flagship-Cancer-Therapy-ELAHERE-R-mirvetuximab-soravtansine-gynx-,-Expanding-Solid-Tumor-Portfolio; Press Release, AbbVie, AbbVie to Acquire Cerevel Therapeutics in Transformative Transaction to Strengthen Neuroscience Pipeline (Dec. 6, 2023), available at https://news.abbvie.com/2023-12-06-AbbVie-to-Acquire-Cerevel-Therapeutics-in-Transformative-Transaction-to-Strengthen-Neuroscience-Pipeline.
24 Dan Papscun, FTC Expected to Vote in 2024 on Rule to Ban Noncompete Clauses, Bloomberg Law (May 10, 2023), available at https://news.bloomberglaw.com/antitrust/ftc-expected-to-vote-in-2024-on-rule-to-ban-noncompete-clauses.
25 Notice of Proposed Rulemaking at 103, Fed. Trade Comm’n, Non-Compete Clause Rule (Jan. 5, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/p201000noncompetenprm.pdf.
26 SEC Schedule 14A at 16, Amedisys, Inc. (Aug. 10, 2023) available at https://www.sec.gov/Archives/edgar/data/896262/000110465923089839/tm2321414-3_defm14a.htm (“Parent and Amedisys received a request for additional information (a ‘second request’) under the HSR Act from the U.S. Department of Justice relating to the Merger on August 4, 2023, extending the HSR Act waiting period until the parties have substantially complied with the second request, unless the period is extended voluntarily by the parties or terminated sooner by the U.S. Department of Justice.”).