ANTITRUST ALERT
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
Healthcare Antitrust
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Detroit Nurses Object to Sixth Circuit Reviewing Class Certification Decision

by | Oct 15, 2013 | , ,

On October 11, 2013, the plaintiffs in the Detroit nurses litigation who have accused Detroit-area hospitals of conspiring to suppress their wages opposed VHS of Michigan, D/B/A Detroit Medical Center’s (DMC) petition to the Sixth Circuit for leave to appeal the district court’s decision granting class certification.

DMC had asked the Sixth Circuit to do an interlocutory appeal of a September ruling certifying a class of more than 20,000 registered nurses seeking more than $1.7 billion in damages based on a purported antitrust conspiracy among Detroit-area hospitals to reduce nurse wages.

The lawsuit was first filed in December 2006 and accuses the Detroit area hospitals of conspiring with one another to keep registered nurses’ wages low.  In particular, the lawsuit alleges that the hospitals agreed to exchange compensation information to reduce wages and competition to hire and retain Detroit nurses.  DMC is the only remaining defendant in the case.  The other seven defendants previously settled the litigation.

In September, a district court judge granted plaintiffs’ motion for class certification.  The hospital asked the Sixth Circuit to review that ruling a few weeks later.  In support of that request, DMC argued that the district court’s decision conflicts with the approach followed by other federal courts and raises important questions about the proper interpretation of the Supreme Court’s recent decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) (Comcast).

In particular, DMC argued that plaintiffs should not have been able to establish predominance through a damages model that calculated damages based in part on a theory of liability (wage fixing claim) that had already been dismissed on a motion for summary judgment.  In addition, DMC argued that the district court failed to take a “close look” at the damages model before certifying the class.

Plaintiffs argued that DMC attempted to make a strained analogy to Comcast and also criticized DMC for raising arguments on appeal that were not raised with the district court.  Plaintiffs argued that this case does not present the sort of “novel or unsettled question” of “class litigation in general” that is worthy of the Sixth Circuit’s discretionary review.

The full case name is In re: VHS of Michigan, Inc., No. 13-113 (6th Cir. filed Sep. 27, 2013).



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UK Competition Commission Provisionally Finds Anti-Competitive Features in Privately-Funded Health Care

by | Sep 4, 2013 | ,

The UK Competition Commission (the CC) has provisionally found that there are anti-competitive features in the supply or acquisition of privately-funded health care services, which give rise to adverse effects on competition.  If the CC’s provisional position is indicative of its final position, private healthcare providers—in particular, private hospital groups—may face significant changes in how they do business in the United Kingdom, and potential new entrants may find additional opportunities.

To read the full article, click here.



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FTC Reaches Unique Settlement with Phoebe Putney Health System Resolving Lengthy Hospital Merger Challenge

by | Aug 28, 2013 | , , ,

by Carrie G. Amezcua and Stephen Wu

The U.S. Federal Trade Commission (FTC) and Phoebe Putney Health System settled the FTC’s complaint that the health system’s merger with Palmyra Park Hospital violated the antitrust laws.  Unique state statutes and regulations effectively prevented the FTC from obtaining its usual remedy for unlawful mergers or acquisitions, a divestiture.  Instead, the FTC is requiring Phoebe Putney to provide prior notice of certain future acquisitions and prohibiting it from objecting to state applications by competitors to enter or expand in the marketplace.

To read the full article, click here.



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FTC Takes a Broad, “Generic” Approach to Actavis in Amicus Brief

by | Aug 22, 2013 | , ,

by Daniel Powers

The Federal Trade Commission’s (FTC) battle against “reverse-payment” settlements continues.  In an amicus brief recently submitted in the case of In re Effexor XR Antitrust Litigation, the FTC advanced a broad interpretation of the Supreme Court’s decision in FTC v. Actavis that looks beyond the labels applied to agreements between brand pharmaceutical manufacturers and the specific type of consideration provided to induce delayed generic entry. The FTC also outlines a two-step inquiry it contends is the appropriate manner of analyzing the potential antitrust concerns raised by such agreements.

The FTC has long targeted “reverse payment” settlements. A reverse payment settlement restricts the generic pharmaceutical from entering the market until a future date (even if that date is before the patent at issue expires) and includes a transfer of value from the brand to the generic firm, typically in the form of payments arising from an ancillary agreement for services or products provided by the generic. The Supreme Court’s decision in Actavis, while rejecting the FTC’s view that “reverse payment” agreements were per se illegal, nevertheless held that such agreements were not immune from antitrust scrutiny.  The Court held that such agreements “can sometimes violate the antitrust laws,” and that the rule of reason is the legal standard that courts must apply when determining whether such a particular agreement violates the antitrust laws.

In the Effexor XR case, plaintiffs have challenged a patent settlement agreement between pharmaceutical manufacturers Wyeth and Teva Pharmaceuticals. They claim that Teva agreed to delay introduction of its generic version of Wyeth’s drug Effexor XR, and that Wyeth agreed not to market an authorized generic version of Effexor XR for a period of time. There was no cash payment between the defendants and for this reason they have argued that Actavis is not applicable.

The FTC’s brief rejects the view that Actavis is limited to cash payments only.  It contends that the defendants’ interpretation puts form over substance and would allow a ready means for manufacturers to circumvent the Actavis ruling. The FTC argues that Actavis instead reflects an approach focused on a two-part inquiry. Courts, the FTC says, must first examine whether the alleged payment (whatever form it takes) was something that the generic challenger could have obtained had it won the underlying patent infringement litigation. If not, then the courts must inquire whether the payment is a vehicle for the parties to share monopoly profits by avoiding competition.

Taking this “generic” approach to Actavis, the FTC contends that the absence of a cash payment is not determinative and that Wyeth’s commitment not to market an authorized generic version of Effexor XR “presents the same antitrust concern as the reverse payments the Supreme Court considered in Actavis.” It remains to be seen how the district court will rule, but the FTC’s amicus brief signals that the Commission will continue to scrutinize settlement agreements and will resist attempts to limit the application of Actavis narrowly to its facts.



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Plaintiffs Abandon Putative Class Action Against Pfizer and Takeda over Protonix

by | Jul 19, 2013 | ,

by Lincoln Mayer

Plaintiffs in a putative class action against Pfizer, Inc. and Takeda Pharmaceutical Co., related to acid reflux drug Protonix, will no longer give the two companies any heartburn.  The plaintiffs stipulated to dismissal from New Jersey federal district court after a settlement in related proceedings that held the patent-in-suit valid and enforceable.  Fawcett v. Altana Pharma AG, No. 2:07-cv-06133-JLL-CCC.

The plaintiffs had premised their claims on Takeda’s patent—licensed to Pfizer—being invalid and obtained by fraud on the patent office.  The court put the suit on hold while Takeda and Pfizer litigated the validity of the patent in an infringement action against generic drug-makers Teva Pharmaceutical Industries Ltd. and Sun Pharmaceutical Industries Ltd.  In 2010, a judge found that patent to be valid, and last month the parties reached a settlement in the damages litigation with Teva and Sun agreeing to pay Pfizer and Takeda $2.15 billion.

The settlement prompted the New Jersey court to ask why it should not dismiss as moot the putative class action.  The parties replied that they were preparing to stipulate to dismissal, which the court granted on July 14, 2013.



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North Carolina Dentists Seek Rehearing En Banc After Losing Bid for Antitrust Immunity

by | Jul 19, 2013 | ,

by Lincoln Mayer

North Carolina’s dentists were not smiling when a three judge panel of the U.S. Court of Appeals for the Fourth Circuit sided with the Federal Trade Commission in a challenge to the State Board of Dental Examiners’ policy that only dentists could perform teeth whitening.  On July 15, 2013, the board filed a petition asking the full court to reconsider the panel’s May 31, 2013 decision.  N.C. State Bd. of Dental Examiners v. FTC, No. 12-1172.

The dispute centers on whether the state action doctrine shields the board’s policy from antitrust scrutiny.  That doctrine holds that state actors need only show that the state had a clearly articulated policy to displace competition with regulation.  However, private parties invoking the doctrine must also show that they are actively supervised by the state.  The Fourth Circuit panel concluded that since the board is composed of licensed dentists who have a financial interest in the market and are answerable to other members of the profession with a similar interest, the board needed to demonstrate active state supervision.  The board countered that it is a state agency and therefore does not need to satisfy this additional requirement.

The North Carolina State Bar, and the National Association of Boards of Pharmacy together with the North Carolina Board of Pharmacy and North Carolina Board of Physical Therapy Examiners, submitted amici briefs supporting the dental board’s petition.



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Antitrust and Healthcare: A Comprehensive Guide

by | Jul 9, 2013 | , ,

McDermott Will & Emery is pleased to announce the publication of Antitrust and Healthcare: A Comprehensive Guide, First Edition. This new publication, produced by American Health Lawyers Association provides invaluable “practice pointers” to help healthcare industry participants, and their counsel, minimize antitrust risk and more successfully plan and execute business and litigation strategies.   McDermott partner, David Marx, Jr., co-authored this first edition with Christine L. White and Saralisa C. Brau of the Federal Trade Commission. The authors draw on their significant government enforcement and private-sector counseling and litigation experience to explain the application of antitrust principles to the different segments of the healthcare industry and the specific issues they confront.  Health care lawyers and antitrust practitioners will find this new guide a complete resource for representing all types of organizations including healthcare providers; commercial insurance companies and managed care organizations; for-profit, not-for-profit, and government-owned or controlled concerns; self-insured employers; and professional partnerships.   Sections covered include:
  • Antitrust Overview
  • Mergers, Acquisitions, and Issues of Legality
  • Premerger Notification and Transaction Planning
  • Joint Ventures
  • Provider Networks and Managed Care Contracting
  • Trade Associations and Group Purchasing Organizations
  • Medical Staff Privileges, Exclusive Physician Contracts, and Peer Review
  • Monopolization
  • The Robinson-Patman Act
  •  Exemptions and Immunities
The full table of contents can be viewed here.   To purchase the book, click here. 


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ACOs and Antitrust Are Aligned and Compatible, Says Commissioner Brill

by | Jun 13, 2013 | , , ,

by Carrie G. Amezcua

FTC Commissioner Julie Brill addressed attendees at the 2013 National Summit on Provider Market Power on June 11.  The focus of her remarks were on the intersection of antitrust, the Affordable Care Act (ACA) and Accountable Care Organizations (ACOs).  She first touched on the ACA.  Noting the empirical evidence shows that high concentration among health care providers has harmful competitive effects, she was optimistic that the exchanges that will be established as a result of the ACA will offer consumers a range of competing, affordable health care products and will encourage greater competition in local insurance markets. 

Turning to ACOs and antitrust, she stated that the FTC is starting to hear providers contend that the ACO program is a justification for their (alleged) anticompetitive activity.  Providers complain that the government is "talking out of both sides of their mouth" with Centers for Medicare & Medicaid Services (CMS) encouraging coordination via the ACO program and the antitrust agencies challenging coordination.  Commissioner Brill disagreed stating that "the goals of the ACA and antitrust enforcement are aligned and compatible."  She noted the extensive cooperation between CMS and the antitrust agencies.  She explained that the ACA requires coordination of care but that it "neither requires nor encourages to merger or otherwise consolidate," but like any collaboration short of a merger, they must do so in a way that does not violate antitrust laws.  Commissioner Brill also stated that ACOs are flourishing and only two provider groups have thus far sought antitrust guidance as permitted under the ACO Policy Statement from the agencies before forming the ACOs. 

Finally, Commissioner Brill emphasized that the FTC will continue to investigate provider collaborations or mergers where there may be competitive harm.  She made a point to clarify that the FTC evaluates all assertions of efficiencies and quality improvements but that parties must provide "good documentary evidence" to support these assertions.

Commissioner Brill’s speech is consistent with the posture and approach the agencies have been taking with regard to provider consolidations in the relatively new landscape being built by the ACA and formation of ACOs.  There is not yet enough data to see exactly how the ACA will affect providers from an antitrust perspective.  But providers can be certain that the agencies will continue to look closely at any consolidation or collaboration that may violate the antitrust laws, regardless of whether the activity was taken to try to comply with the ACA. 

The full speech can be found here.



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FTC Wins NC Dental State Action Case

by | Jun 4, 2013 | ,

by Daniel Powers

On May 31, the Federal Trade Commission (FTC) recorded yet another victory in its continuing efforts to limit the scope and application of antitrust immunity under the state action doctrine.  The Fourth Circuit ruled that the North Carolina State Board of Dental Examiners’ efforts to block non-dentists from providing teeth-whitening services was not entitled to antitrust immunity because the Board’s activities were not actively supervised by the state.  North Carolina State Board of Dental Examiners v. Federal Trade Commission, Case No. 12-1172 (4th Cir. May 31, 2013).

The case focused on the activities of the North Carolina state agency, which is composed of several practicing dentists, a dental hygienist and a consumer representative.  The Board licenses dentists in the state and is otherwise empowered to take disciplinary measures against licensees.  Beginning in approximately 2003, in response to complaints from dentists practicing in the state, the Board opened numerous investigations into teeth-whitening services provided by non-dentists.  As a result of these investigations, the Board issued dozens of cease-and-desist letters to such service providers and sought to restrict the market to licensed dentists by other means.

The Board’s activity attracted the attention of the FTC, which issued an administrative complaint in 2010 charging that the Board violated the FTC Act by acting to exclude non-dentist teeth whiteners from the market in North Carolina.  A trial on the merits before an administrative law judge found the Board had violated the Act.  On appeal, the FTC affirmed and entered a final order enjoining the Board from, among other things, continuing to unilaterally issue extra-judicial orders to teeth-whitening services in North Carolina.  The Fourth Circuit’s decision came in response to the Board’s petition for review of the FTC’s order.

The Board maintained that it was a state entity created to regulate the practice of dentistry, which encompassed the teeth-whitening services.  Under the state action doctrine, private parties may claim immunity from the antitrust laws if they act according to a “clearly articulated and affirmatively expresses state policy,” and their behavior is “actively supervised by the State itself.”  California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc. (445 U.S. 97, 105 (1980).  Municipalities and sub-state entities benefit from a less restrictive test.  Such entities must act pursuant to a “state policy to displace competition with regulation or monopoly public service.”  FTC v. Phoebe Putney Health System, Inc., 133 S. Ct. 1003, 1010 (2013).  These entities are not required to demonstrate the “active state supervision” required under the two-prong Midcal test because with such entities there is little danger that their activities involve a private anti-competitive activities. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 47 (1985).

Relying on its status as a state entity, the Board maintained that it was not subject to the “active supervision” prong required under Midcal.  The FTC countered that entities like the Board, regulatory bodies made up of market participants, were subject to the stricter Midcal test.  The FTC focused on the need to [...]

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