On October 23, 2017, a company that developed software to track and trace pharmaceuticals filed a complaint against a pharmaceutical distributors trade association that currently dominates the market for such software, alleging a conspiracy to lock up long-term contracts with customers and exclude competition in violation of the Sherman Act and the Virginia Antitrust Act. Tracelink, Inc. v. Healthcare Distribution Alliance, Case No. 1:17-cv-01197-AJT-IDD (E.D. Va. Oct. 23, 2017). Continue Reading Pharma Distributors Trade Association Sued for Conspiracy to Exclude Competition for its Track and Trace Software
Farrah Short is an Associate in the firm’s Washington, DC office. Farrah advises on all aspects of antitrust and competition law, including merger review, competitor collaborations, government investigations, private class action litigation, health care antitrust, and general antitrust compliance. She has obtained antitrust clearance for major, multi-billion dollar transactions in a variety of industries.
The Third Circuit granted on Tuesday the Federal Trade Commission’s (“FTC”) request for an injunction pending appeal of the proposed merger between Penn State Hershey Medical Center and Pinnacle Health System. The injunction comes just before the temporary restraining order against the merger issued by the U.S District Court for the Middle District of Pennsylvania was set to expire on Friday. Earlier this month, the district court denied the government’s request to block the merger. Continue Reading FTC Wins Stay of Pennsylvania Hospital Merger Pending Appeal in Third Circuit
The Federal Trade Commission (“FTC”) and the state of Pennsylvania have two weeks to persuade the Court of Appeals for the Third Circuit that the pending merger of Penn State Hershey Medical Center (“Hershey”) and Pinnacle Health System (“Pinnacle”) is anticompetitive. The FTC’s request for a preliminary injunction against the pending merger was denied on Monday by the U.S. District Court for the Middle District of Pennsylvania which found that the deal was likely to benefit patients. FTC v. Penn State Hershey Medical Center, 1:15-cv-02362 (M.D. Penn May 9, 2016). That decision is analyzed here. On Tuesday, the government filed a motion in the district court seeking an injunction enjoining the proposed merger pending an emergency appeal to the Third Circuit.
Pursuant to a December stipulated temporary restraining order (“TRO”), the hospitals are entitled to consummate the merger within three business days following a ruling denying the preliminary injunction. Thus, under that TRO, the merger could have closed today. In their opposition to the FTC’s motion for an injunction pending appeal, the hospitals indicated that they would not oppose a two week extension of the TRO if the government filed for an injunction with the Third Circuit. The FTC filed its emergency appeal and the district court granted the two week extension, setting the new TRO expiration date to May 27. The hospitals’ response to the emergency motion is due Wednesday May 18th. Continue Reading FTC Granted 2-Week Reprieve in Effort to Block Pennsylvania Hospital Merger
Two West Virginia hospital systems settled a lawsuit filed yesterday by the Department of Justice (“DOJ” or “Department”) alleging that they agreed to allocate territories for marketing health care services in violation of Section 1 of the Sherman Act. The DOJ alleged that Charleston Area Medical Center (“CAMC”) and St. Mary’s Medical Center (“St. Mary’s”) agreed not to advertise in each other’s geographic territories, which the Department said deprived customers of useful information about competing health care providers. U.S. v. CAMC, Case No. 2:16-cv-03664 (S.D. W.VA. Apr. 14, 2016).
Certain types of agreements between competitors (e.g., market allocation, price fixing) are strictly prohibited under Section 1 of the Sherman Act. These types of agreements are considered per se illegal and are presumed as harmful because they deprive consumers of the benefits of competition and provide no offsetting benefit to consumers. This case is a reminder that the antitrust authorities can, and do, challenge market allocation arrangements and other naked restraints of trade that violate Section 1 of the Sherman Act. Continue Reading Hospitals Settle DOJ Suit Alleging Illegal Division of Marketing Territories
The antitrust suit against Willis Knighton Medical Center will continue following the denial of its motion to dismiss. BRFHH Shreveport v. Willis Knighton Med. Ctr., case number 5:15-cv-02057 (W.D. La. Mar. 31, 2016). The case was filed last July by BRFF Shreveport, a competing healthcare provider, and Vantage Health Plan, a health insurer. The district court held that plaintiffs had sufficiently pled anticompetitive conduct and injury relating to Willis Knighton’s acquisitions of competing providers.
Plaintiff BRFHH Shreveport is the operator of University Health Hospital in Louisiana. Plaintiff Vantage specializes in lower-cost HMO coverage. Defendant Willis Knighton operates four hospitals and six clinics in the Shreveport area. According to plaintiffs, Willis Knighton’s share of hospital admissions in the Shreveport area is approximately 60% overall, and approximately 75% among commercially insured patients.
Plaintiffs previously sought a preliminary injunction to block the joint venture, which the district court denied. Willis Knighton then sought to dismiss all claims against it. Ruling from the bench, the district court previously denied the motion to dismiss on all but one ground—Vantage’s Sherman Act Section 2 claim. Specifically, Vantage alleged that Willis Knighton’s prior acquisitions of competitors, physician referral practices, and non-compete employment contracts violated Section 2. That claim was addressed in the district court’s 50-page order. Continue Reading LSU Hospital Operator May Proceed with Antitrust Suit Against Competing Health System
The Federal Trade Commission (FTC) submitted written comments last week on the likely competitive impact of a legislative proposal in West Virginia to modify the supervision requirements imposed on Advanced Practice Registered Nurses (APRNs) for certain activities. The legislative proposal would permit some APRNs, under limited conditions, to write prescriptions without a formal agreement with a particular supervising physician. It would also place the regulation of certain APRNs under the authority of the West Virginia Board of Medicine or Board of Osteopathic Medicine. In its well-established role of promoting competition in the health care industry through enforcement, study, and advocacy, the FTC has a record of actively urging the opening of health care markets to a broader range of providers. In 2014, the agency issued a paper titled Policy Perspectives: Competition and the Regulation of Advanced Practice Nurses, in which it advocated for the expansion of APRN scope of practice.
The FTC has repeatedly recognized “the critical importance of patient health and safety, and [ ] defer[s] to state legislators to determine the best balance of policy priorities and to define the appropriate scope of practice for APRNs and other health care providers.” Nonetheless, the FTC argues that “undue regulatory restrictions on APRN practice can impose significant competitive costs on patients and third-party payors, and may frustrate the development of innovative and effective models of team-based health care.”
The West Virginia proposal would allow an APRN to be licensed by either the Board of Medicine or Osteopathic Medicine to prescribe medicine without the formal collaborative written agreement with a physician as currently required if that APRN: i) [h]as at least five years of clinical prescribing experience in a collaborative arrangement with a physician; ii) is working solely in an area that has been designated … as a Health Professional Shortage Area; and iii) has a recommendation from his or her collaborative physician which recommends that the [APRN] be permitted to prescribe without a collaborative arrangement. Continue Reading FTC Again Urges Consideration of Competitive Impact on State Regulation of APRNs
A federal district court denied the Texas Medical Board’s (the Board) motion to dismiss an antitrust suit filed by a telemedicine company (Teladoc), finding that the Board is not entitled to state action immunity because its actions are not actively supervised by the state. Teladoc, Inc. v. Texas Medical Board, No. 1-15-cv-343 (W.D. Tex Dec. 14, 2015) (order denying motion to dismiss). As we previously reported, the Board issued an emergency rule in January attempting to amend its telemedicine regulations to mandate a “face-to-face visit or in-person evaluation” prior to a physician issuing a prescription. The Board then engaged in a formal rulemaking to adopt the amendment in April. Teladoc won a preliminary injunction in May, temporarily blocking the implementation of the new rule. Continue Reading Antitrust Suit Continues to Stymie New Texas Telemedicine Regulation
Last week the Federal Trade Commission (FTC) authorized an action to block a proposed hospital merger pending an administrative trial. According to the FTC, the merger of Penn State Hershey Medical Center (Hershey) and PinnacleHealth System (Pinnacle) would create a dominant provider of general acute care inpatient hospital services sold to commercial health plans in the Harrisburg, Pennsylvania area. The FTC filed its administrative complaint on December 7, 2015 (public redacted version posted on December 14, 2015). In the Matter of The Penn State Hershey Medical Center and PinnacleHealth System, FTC Docket No. 9368. The Commission filed jointly with the Pennsylvania Office of the Attorney General a complaint under seal in federal district court seeking a temporary restraining order and preliminary injunction, which the district court granted. FTC v. Penn State Hershey Medical Center, 1:15-cv-02362 (M.D. Penn Dec. 9, 2015). Continue Reading FTC Alleges “Three-to-Two” Hospital Merger Will Reduce Competition