Antitrust Agencies Defend Health Care Enforcement Efforts at Congressional Hearing

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The FTC and Department of Justice were called upon to defend their records of antitrust enforcement in the health care industry by House Judiciary Committee Chair John Conyers (D, Mich.) at a hearing held yesterday by the Judiciary Committee’s Subcommittee on Courts and Competition Policy.

The hearing considered the role of antitrust in light of the health care reform effort. Conyers expressed concern that the enforcers were not following through with President Obama’s plan to reinvigorate antitrust enforcement in the health care area.

“Pay-for-Delay” Drug Patent Settlements

FTC Bureau of Competition Director Richard A. Feinstein delivered the FTC testimony. Chief among the anticompetitive tactics targeted by the FTC are “pay-for-delay” drug patent settlements, in which a branded drug company compensates a generic competitor for not bringing its lower-cost drug to market for a certain period of time, according to the agency’s testimony.

Agency challenges to mergers involving hospitals, drug manufacturers, and medical device makers were also discussed.

“The FTC has an important role to play: by protecting and promoting competition we can help to lower costs and improve quality,” Feinstein said. “Years of experience have shown us that continued effective antitrust enforcement is a necessary component of any plan to improve health care.”

The FTC testimony is available here at the FTC website.


Health Care Delivery, Insurance

Sharis A. Pozen, Chief of Staff and Counsel to the Assistant Attorney General in charge of the Department of Justice Antitrust Division, delivered a statement on behalf of the Antitrust Division. Pozen’s remarks focused on two areas:

(1) The importance of encouraging innovation and efficiency in health care delivery and the ways in which coordination and integration among health care providers can help achieve these goals while still preserving competitive markets; and

(2) The importance of measured, responsible antitrust enforcement in preserving open and vigorous competition in health insurance markets.

The Justice Department’s civil antitrust lawsuit against Blue Cross Blue Shield of Michigan alleging that the insurer used its dominance to impose anti-competitive “Most Favored Nation” provisions in its agreements with Michigan hospitals was cited as an example of the agency’s “measured enforcement to prevent . . . anticompetitive behavior.”

With respect to merger enforcement, Pozen warned that the Justice Department “will carefully review mergers in the health insurance industry and will continue to challenge those mergers that are likely to substantially lessen competition.”

Text of the remarks is available here on the Department of Justice Antitrust Division’s web site.


Accountable Care Organizations

Conyers spoke about the perceived disparity in prosecutorial treatment between health care providers on the one hand and health insurers on the other. He questioned the continuing need for antitrust immunity for health insurance companies, while physicians fear antitrust attack for coordinated activity.

Pozen noted that Accountable Care Organizations or ACOs are a good example of how providers might work together to provide more efficient, high-quality care without inhibiting competition. The Affordable Care Act permits the formation of ACOs to enable competing physicians and other providers to coordinate care for Medicare beneficiaries in an effort to improve quality and lower costs.

Pozen said that the Justice Department was actively working with Health and Human Services and the FTC as the ACO regulator process evolves. She added that the Justice Department was committed to “providing efficient, quick review to any new business model that plans to deliver integrated care.”

A video webcast of the hearing is available here on the House Judiciary Committee’s website.