Healthcare Sector Comes Under Increased Government Antitrust Scrutiny

In May 2010, the Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division, Christine Varney, referred to the essential role that antitrust has in preserving and protecting competition, which together with regulation, can be harnessed to expand coverage, improve quality and control the cost of health care. Ms. Varney stated that:

[Y]ou should expect the Justice Department to carefully scrutinize and continue to challenge exclusionary practices by dominant firms…that substantially increase the cost of entry or expansion. This is particularly so with respect to most-favored nations clauses and exclusive clauses between insurers and significant providers that reduce the ability or incentive of providers to negotiate discounts with aggressive insurance entrants.

See Christine Varney, Antitrust and Healthcare, Speech before the ABA / American Health Lawyer's Association Antitrust in Healthcare Conference (May 24, 2010).

Now, less than six months later, DOJ and the state of Michigan have filed a civil antitrust lawsuit against Blue Cross Blue Shield of Michigan ("Blue Cross") alleging that the most favored nation (MFN) clauses in its agreements with hospitals, “raise hospital prices, prevent other insurers from entering the marketplace and discourage discounts...result[ing] in Michigan consumers paying higher prices for healthcare services and health insurance.” See DOJ Press Release, Justice Department Files Antitrust Suit Against Blue Cross Blue Shield of Michigan (Oct. 18, 2010) and DOJ Complaint.