The Current Intersection of Antitrust and Managed Care

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This article provides a summary of key healthcare antitrust developments in 2013, highlighted by two important Supreme Court decisions:

  • In FTC v. Phoebe Putney Health System, Inc.,133 S.Ct. 1003 (2013), the Court reversed the 11th Circuit Court of Appeals ruling that the state action immunity to antitrust laws applied to a Georgia law authorizing hospital authorities to participate in the hospital services market and exercise corporate powers.
  • In FTC v. Actavis, Inc., 133 S.Ct. 2223 (2013), the Court held that the rule of reason applies to whether “reverse settlements” – where branded drug manufacturers sue generic companies for patent infringement and settle by paying generics to stay off the market – violate the antitrust laws.

Notwithstanding the encouragement of integration of providers though ACOs, the FTC is increasing enforcement of hospital acquisitions of physician practice groups resulting in too much market power in a specialty.  Thus, the FTC challenged St. Luke’s Health System's acquisition of Idaho's largest multi-specialty IPA.  The defendants argued that the acquisition promotes the integration of health care delivery, promotion of best medical practices, tough quality control and electronic record-keeping.  The FTC’s position is that the 57 percent resulting market share will lead to higher costs.  The case was tried and is under submission.

The Department of Justice’s suit against Blue Cross Blue Shield Michigan (BCBS) based on the use of MFN clauses was dismissed after Michigan passed legislation prohibiting MFN clauses by insurers.  BCBS still faces lawsuit by Aetna and consumer class actions.  See Aetna Inc. v. Blue Cross Blue Shield of Michigan, 2:11-cv-15346, Eastern District of Michigan; The Shane Group Inc. et al. v. Blue Cross Blue Shield of Michigan, 2:10-cv- 14360, Eastern District of Michigan.

The long-running West Penn Allegheny Health System v. Univ. of Pittsburgh Medical Center. 627 F.3d 85 (3rd Cir. 2010), case was dismissed based on the filed rate doctrine because all of the rates at issue were approved by the Pennsylvania Insurance Department.

Numerous lawsuits have been brought alleging a conspiracy among the Blue Cross and Blue Shield Association (BCBSA) and its member plans to divide the U.S. healthcare market into geographical areas that allowed plans to avoid competing with each other.  In addition to damages for alleged overpayments, the suits seek to force BCBSA to allow multiple Blue Plan licensees to offer insurance in individual states.  The cases have been coordinated as multi-district litigation in Alabama.

 

Topics:  ACOs, Acquisitions, Actavis Inc., FTC, FTC v Actavis, FTC v. Phoebe Putney Health System, Healthcare, Hospitals, MCOs, Reverse Payment Settlement Agreements

Published In: Antitrust & Trade Regulation Updates, Health Updates, Mergers & Acquisitions Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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