FTC Developments Archives | Page 27 of 49

North Carolina Legislature Passes Prohibition on MFNs in Health Care Contracts

by Emily Townsend | May 2, 2013 | DOJ Developments, FTC Developments, Healthcare Antitrust

On Tuesday, the North Carolina legislature has enacted into law, pending the governor’s signature, a prohibition on the use of most favored nations (MFN) clauses in contracts between commercial health insurers and providers.

The two-page bill, titled “Freedom to Negotiate Health Care Rates,” lists "prohibited contract provisions related to reimbursement rates." The bill prevents a commercial health insurer from prohibiting a health care provider with which it contracts from entering into a contract with another insurer at equal or lower rates. In addition, insurers are not permitted to require a provider to accept a lower rate from the contracting insurer, or to require a renegotiation of rates, in the event that the provider agrees to provide equal or lower rates to another commercial health insurer. Next, the bill prohibits an insurer from terminating a provider that agrees to provide services at lower rates to another insurer. An insurer is also prevented from requiring that a provider charge another commercial health insurer a higher rate. Finally, insurers can no longer require that providers disclose the provider’s contractual rate with another health insurer.

MFN clauses have been attracting attention in recent years, particularly in the health care field. North Carolina’s bill follows closely on the heels of Michigan’s ban on MFN clauses passed in March 2013. That action led the Department of Justice (DOJ) to file a motion asking the court to dismiss an antitrust suit against Blue Cross Blue Shield of Michigan (BCBSM), in which the DOJ alleged the MFN clauses in BCBSM’s contracts with hospitals stifled competition, raised health care costs and harmed consumers. Ohio has a similar ban on MFN clauses.

Last year, the DOJ and the Federal Trade Commission (FTC) held a public workshop specifically to discuss the competitive effects of MFN clauses. The workshop featured panels discussing economic theories concerning MFN clauses and why they are used, and the legal treatment of and industry experiences with MFN clauses, among other topics.

MFN clauses are evaluated under the antitrust law rule of reason, because, depending on the applicable facts and circumstances, such provisions have been found to have procompetitive or anticompetitive effects. A recognized procompetitive feature of MFN clauses is lower transaction costs, which provides price stability over time and ensures that a buyer is not treated any worse than its rivals. The DOJ argued in the BCBSM case, on the other hand, that the MFN clauses there reduced incentives to lower prices, facilitated coordination and prevented entry.

Health care clients using or considering the use of MFN clauses should consult antitrust counsel to assess their legal risks in light of these developments.

FTC’s New Chairwoman Ramirez Says Health Care Continues To Be Top Priority

by Emily Townsend | Apr 26, 2013 | FTC Developments, Healthcare Antitrust, IP Antitrust, Mergers & Acquisitions

by Hillary Webber

In remarks made this week at the International Competition Network annual conference, Federal Trade Commission (FTC) Chairwoman Edith Ramirez stated that health care will continue to be a top priority for the FTC. Referring to health care and hospital mergers in particular, she said that the Commission will "guard[] against what we consider to be consolidation that may end up having adverse consequences for consumers." The Chairwoman’s comments indicate that the recent leadership change at the FTC from former Chairman Jon Leibowitz to Chairwoman Ramirez has not altered the Commission’s priorities.

Recent months have seen a flurry of FTC activity in the courts related to health care. For example, two FTC cases came before the U.S. Supreme Court this term — the FTC’s challenge to Phoebe Putney’s acquisition of Palmyra Park Hospital in Georgia and the FTC’s challenge to "pay-for-delay" patent infringement litigation settlements between branded and generic pharmaceutical manufacturers.

In February, the Supreme Court ruled that the state action doctrine did not immunize Phoebe Putney’s hospital transaction from federal antitrust scrutiny, and the FTC has subsequently filed renewed motions in federal district court to stop further integration of the two hospitals even as it prepares for a full administrative hearing on the merits that will begin in August.

A decision on the "pay-for-delay" case is expected in June. The Supreme Court’s ruling may have a large impact on further FTC efforts against what it perceives as anticompetitive efforts to delay generic drug entry.

Health care clients considering acquisitions are advised to consult antitrust counsel early in the transaction process. Given the FTC and DOJ’s close scrutiny of health care transactions, early advocacy before the antitrust agencies is often critical to a deal closing on schedule.

Supreme Court Hears Oral Argument in “Pay-for-Delay” Patent Settlement Antitrust Case

by Emily Townsend | Mar 27, 2013 | FTC Developments, Healthcare Antitrust, IP Antitrust

by Jeffrey Brennan and Glenn Engelmann

The Supreme Court’s ruling in Federal Trade Commission v. Actavis, Inc., will almost certainly have major implications for the viability of Federal Trade Commission and private suits alleging that pay-for-delay settlements are anticompetitive, and for the level of antitrust risk facing companies that enter into such settlements.

Click here to view Jeff Brennan discuss the case on PBS‘ “Nightly Business Report.”