There are some persuasive incentives for your practice to consider implementing or reviewing its antitrust compliance right now.
Every four years, like clockwork, law firms feel the urge to remind their clients that “a new sheriff is in town” and that renewed antitrust enforcement in any given industry will surely be afoot soon. This tendency of my fellow lawyers to warn of the government’s impending appetite for Sherman Act prosecutions is as predictable as it is often not borne out in reality, as the outgoing administration’s antitrust track record has proven. This year, however, may indeed be different – and so I add my tentative voice to the chorus, by leading with the punch line right off the bat: “Your practice group or CIN should probably consider conducting a comprehensive ‘antitrust physical’ of itself this spring!”
Undertaking regular compliance check-ups is as advisable, of course, as a patient’s routine annual blood panel – but with healthcare likely topping President Biden’s antitrust enforcement agenda (perhaps only paralleled in importance by its focus on “big tech”), it will be of particular relevance this year. Let me briefly explain in 5 bullet points why I believe this to be the case.
First, it is a given that the topic of “healthcare reform” sits atop the political and social-discourse agenda. One of the key tools the Biden administration has in its arsenal to achieve the desired changes – such as lowering costs, breaking up dominant players and preventing the further agglomeration of market power resulting from M&A deals, ensuring fairness in insurance and pharmaceutical pricing, and generally enhancing consumer access to healthcare across the country – will be its use of the antitrust laws (which are elsewhere more aptly named “competition laws”). Quite literally, the Sherman Act (and its little sibling, the Clayton Act) was made for achieving all of the examples given in the preceding sentence.
Second, it strongly appears that Mr. Biden and Ms. Harris will generally take a keener interest in strictly objective antitrust enforcement than Mr. Trump, under whom the DOJ’s merger enforcement was frequently considered to be merely a tool for achieving ulterior objectives that were politically expedient (the DOJ’s objection to the AT&T/TimeWarner/CNN deal comes to mind). There is also the increased experience level of the incoming White House team: I once had the honor of being on the opposite side of VP Harris, acting in her role as California Attorney General, in a price-fixing cartel case. I can speak from experience that she is a determined litigator, seasoned in the often-complex specialty of law & antitrust economics. In addition, there is word in D.C. that the White House is considering the creation of a new “antitrust czar” advisory position within the executive. Taken together, it all points to increased action at the FTC and DOJ’s in-house competition “shops.” (I note that, while both agencies technically have jurisdiction over healthcare antitrust matters, based on a 2002 memorandum of understanding between the agencies, the FTC has historically focused on hospitals, professional services, medical equipment, and medical devices, whereas the DOJ investigated health insurance cases as well as all criminal antitrust proceedings, such as price-fixing cartels or competitors’ no-poach agreements).
Third, the healthcare sector lies at the intersection of several recent antitrust focus points, among them (1) “vertical integration” (e.g., in the insurance/PBM/pharmacy spaces, where I expect to see enforcement action to increase in the next four years, especially after the advent of the Agencies’ joint 2020 Vertical Merger Guidelines); (2) “reverse payment settlements” (where generic and branded pharmaceutical manufacturers are accused of cozying up too much, as exemplified in the very recent FTC action against Endo Pharmaceuticals and Impax Laboratories); and (3) “big data” (affecting virtually all healthcare players, with the future of the industry clearly headed towards value-based medicine and fully-electronic patient files, and antitrust laws often complicating how practices can manage patient, supplier, and price/cost data collection and sharing (or not) within networks) to name only a few.
Fourth, an administration’s active antitrust enforcement isn’t always necessarily a burden – you might also benefit from it. If you are affected by an upstream merger that you perceive as anti-competitively aggregating market power by a supplier or payor of yours, you should consider contacting counsel to file an informal complaint with the relevant agency. This not only holds true for corporate deals, but the same goes for anti-competitive business practices, where the enforcers always value comments or on-the-ground intelligence brought to their attention, especially from concerned non-competitors, such as downstream customers or upstream suppliers.
Fifth, and finally, there are some pretty persuasive incentives for your practice to consider implementing or reviewing its antitrust compliance right now – both from the stick and from the carrot perspective. On the “stick” side, take last year’s criminal enforcement action based on market allocation in the oncology industry, where DOJ charged a large Florida oncology group with one felony count of conspiring to allocate medical and radiation oncology treatments for cancer patients in Southwest Florida; it ended up settling that case in a so-called Deferred Prosecution Agreement that cost the oncology group $120 million (out of which $20m went to the Florida AG), cooperation with the prosecutors, non-enforcement of any non-compete clauses for its doctors, and implementation of a strict antitrust compliance program. And as far as “carrots” go, the Justice Department has recently begun offering literal “credit” to practices that have implemented robust compliance programs and staff training – so why not take advantage and protect your business?