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
On November 8, 2017, the Federal Trade Commission (FTC) will hold a workshop entitled, “Understanding Competition in Prescription Drug Markets: Entry and Supply Chain Dynamics.” Acting FTC Chairman Maureen K. Ohlhausen and U.S. Food and Drug Commissioner Dr. Scott Gottlieb will give the keynote addresses. Part of the goal of the workshop is to identify obstacles to competition and discuss policy steps that can increase the availability of generic drugs to consumers.
The Hatch-Waxman Act (the Act), which Congress passed over 30 years ago, provides a regulatory and judicial framework to expedite generic entry into U.S. prescription drug markets. For many drugs, the Act has helped reduce patent-related barriers to generic drug entry, which, in turn, has increased competition that has led to lower drug prices. In 2010, Congress created a similar framework for biosimilar drug development under the Biologics Price Competition and Innovation Act. Continue Reading Federal Trade Commission Announces Workshop on Competition in the Prescription Drug Market
On Monday, September 11, our colleagues in the Antitrust Section published an alert describing a developing antitrust lawsuit against Franciscan Health System (“CHI Fanciscan”): State of Washington v. Franciscan Health System, et al. No. 3:17-cv-05690 (W.D. Wash. Aug. 31, 2017). The Washington State Attorney General’s office accuses CHI Franciscan of accumulating a controlling share of the “Orthopedic Physician Services” market through incremental acquisition which has led to substantial lessening of competition and illegal price fixing, in violation of Section 7 of the Clayton Act and Section 1 of the Sherman Act, respectively, as well as Washington State antitrust laws.
The alert cautions that health care provider acquisition strategies may come under antitrust scrutiny, even when acquisitions target multiple small physician practices, if the cumulative effect of such acquisitions results in substantial condensation of market share in a particular area of health care services.
For greater insight on this issue, read the full alert here.
On the eve of trial, and after years of litigation (including an appeal to the Sixth Circuit), all claims by Dayton, Ohio hospital The Medical Center at Elizabeth Place (“MCEP”) against Premier Health Partners (“Premier”) have been dismissed with prejudice. This case represents an important development in the body of case law addressing the antitrust risk introduced by joint ventures. Continue Reading District Court Finds Hospital’s Joint Venture Not “Per Se” Unlawful
Earlier this week, my colleagues Bruce Sokler, Robert Kidwell, Dionne Lomax, and Farrah Short published an alert about the federal district court for the Eastern District of Michigan’s recent decision to deny both the government’s and defendant hospital’s respective motions for summary judgment in a suit filed by the Department of Justice and the Michigan Attorney General in 2015 against W.A. Foote Memorial Hospital, d/b/a Allegiance Health (“Allegiance”), Hillsdale Community Health Center (“HCHC”), Community Health Center of Branch County (“Branch”), and ProMedica Health System, Inc. (“ProMedica”). In this case, the government alleged that HCHC orchestrated agreements among the hospitals not to advertise or otherwise market in each other’s territories for competing health care services in violation of the Sherman Act. (You can read Dionne’s previous alert on the Allegiance complaint here.) HCHC, Branch and ProMedica have each settled, leaving Allegiance as the sole defendant. Continue Reading Antitrust Suit Against Michigan Hospital Moves Forward After Federal District Court Denies Both Sides’ Motions for Summary Judgment
On March 30, 2017, in a closely watched case, a federal district court denied the Motion for Judgment on the Pleadings filed by Carolinas Healthcare against a Complaint filed by the DOJ Antitrust Division and the State of North Carolina. The Complaint alleged that Carolinas Healthcare insisted on contract provisions with payors that limited or prohibited steering to lower-cost providers. In its motion, Carolinas Healthcare relied heavily on the Second Circuit decision in United States v. American Express Co., 838 F.3d 179 (2d Cir. 2016), where the Second Circuit had reversed a trial verdict condemning steering restrictions in Amex’s contracts with merchants. This alert reviews the court’s ruling and considers its implications for future health care antitrust cases.
The Federal Trade Commission (“FTC”) and the State of Illinois successfully concluded their challenge to the proposed merger of Advocate Health Care and NorthShore University Health System earlier this month, when the U.S. District Court for the Northern District of Illinois granted the plaintiffs’ request for a preliminary injunction enjoining the health systems from consummating their proposed merger. The parties subsequently abandoned the transaction without appealing the district court’s decision.
The district court had previously denied the motion for a preliminary injunction. It believed that the geographic market proposed by the plaintiffs was too narrow and found the evidence “equivocal” regarding the importance of patients having access to hospitals close to their homes. As such, it held that the plaintiffs had not met their burden of proving a relevant geographic market and thus, did not demonstrate a likelihood of success on the merits. However, in October 2016, the U.S. Court of Appeals for the Seventh Circuit reversed and remanded for further proceedings on the issue of geographic market definition, holding that the lower court erred in its factual findings regarding critical aspects of the geographic market, as well as the remaining preliminary injunction elements that the district court did reach in its first decision.
This alert examines the court’s decision, which not only supports the FTC’s hospital merger enforcement program but continues to up the ante for merging parties attempting to persuade a court that the proposed efficiencies are sufficient to offset alleged anticompetitive effects.
Last week, our antitrust colleagues Bruce Sokler, Robert Kidwell, and Farrah Short, published a Health Care Antitrust Alert on the recent settlement with the Federal Trade Commission by a Puerto Rican ophthalmologist cooperative on charges that the cooperative orchestrated an illegal boycott of a health plan.
As noted in the alert, the case represents the risks of concerted action among competitors, even when that concerted action is facilitated by an otherwise lawful trade association or membership organization.
Earlier this week my colleagues, Bruce Sokler and Farrah Short published an alert detailing the FTC‘s creative solution to permit a presumptively anticompetitive merger for a financially failing medical practice. The FTC entered into a proposed settlement with two Minnesota health care providers, allowing them to proceed with a planned merger that, according to the agency, combines “the two largest providers of adult primary care, pediatric, and OB/GYN services in the St. Cloud area.” The FTC’s willingness to accept the proposed settlement permitting was premised on (1) the fact that one of the medical groups “is a financially failing physician practice” and (2) “concerns regarding disruptions to patient care and possible physician shortages.”
The full alert on the FTC’s envelope-pressing consent solution can be found here.
On Friday, Robert Kidwell and Bruce Sokler, members of the Firm’s Antitrust and Federal Regulatory practice group, presented a webinar on the Third Circuit’s hotly anticipated decision on the FTC’s appeal of the District Court’s denial of its request for a preliminary injunction on the merger of Penn State Hershey Medical Center and Pinnacle Health System.
This case became a topic of interest after the U.S. District Court for the Middle District of Pennsylvania denied the FTC’s request for a preliminary injunction in May 2016. In reaching its decision, the District Court defined the “relevant geographic market” in a manner that, if upheld on appeal, would have essentially gutted the FTC’s approach to hospital merger enforcement. Ultimately, the Third Circuit found that the District Court committed legal error in failing to properly formulate and apply the “hypothetical monopolist test” and issued an opinion that Rob and Bruce characterized as a “big win” for the FTC.
Rob and Bruce also expect this decision to be helpful to the FTC in its ongoing challenge to the Advocate/North Shore merger in Chicago (check out our previous blog post on this topic by clicking here). Stay tuned for further updates!