Latest Symptom of the Health Care Crackdown: DOJ Announces New Task Force Targeting Sector’s Anti-Competitive Conduct

Morrison & Foerster LLP

Morrison & Foerster LLP

On May 9, 2024, the U.S. Department of Justice’s Antitrust Division (DOJ) announced it is “upping [its] game” on health care enforcement through the Task Force on Health Care Monopolies and Collusion (HCMC). The most recent in a series of DOJ task forces designed to target particular industries, the HCMC will broadly “guide the division’s enforcement strategy and policy approach in health care, including by facilitating policy advocacy, investigations and, where warranted, civil and criminal enforcement in health care markets.” Below we explore the mission of the HCMC and its implications as the Biden administration escalates its scrutiny of the health care industry.

What Is the HCMC?

The HCMC will bring together industry watchdogs and analysts—civil and criminal prosecutors, economists, health care industry experts, technologists, data scientists, investigators, and policy advisors—from across DOJ to tackle antitrust enforcement in the areas of patient care, medical technology, and health care administration. When he announced the HCMC, Assistant Attorney General Jonathan Kanter articulated three guiding principles behind the task force:

  1. “Multisided Giants”: DOJ seeks to address new “market realities” in the health care industry, with consolidated, vertically integrated health care intermediaries purportedly “accumulating assets at an alarming rate” and serving as “gatekeepers” to the health care system, leading to a “platformization of health care.”
  2. A Coordinated Effort: Kanter pointed to DOJ’s ability to regulate industries from multiple angles, through its civil merger program, monopolization program, and criminal enforcement, in addition to interagency coordination, but emphasized that the Division needs internal coordination to “bring all of these resources to bear.” 
  3. Stronger Policies Through Stronger Enforcement: Kanter cited DOJ’s need to have a “strong policy voice” on health care to build on the Biden administration’s “whole-of-government” approach to antitrust enforcement.

The HCMC’s purview will span the health care industry and police a broad range of conduct, from wage-fixing and pricing-fixing, to consolidation, restrictive exclusivity clauses, and anticompetitive uses of health-related data. Katrina Rouse, an antitrust prosecutor who joined DOJ in 2011 and previously served as Chief of the Division’s Defense, Industrials, and Aerospace Section, will direct the task force. 

Task Force Follows Heightened Scrutiny of Health Care Industry

The HCMC’s launch builds on other initiatives that collectively demonstrate that the health care sector is a focal point of the Biden administration’s antitrust enforcement program. Last year, for example, DOJ withdrew three long-standing policy statements outlining safe harbors for information-sharing in the healthcare industry, indicating that the policies were outdated because they did not account for technological advancements that allow companies to deduce competitors’ pricing strategies from aggregated data and signaling future enforcement actions regarding information sharing. In March 2024, the White House introduced a joint “strike force on unfair and illegal pricing” focused on pricing in “key sectors,” including pharmaceuticals and health care. Around the same time, the FTC, DOJ, and Department of Health and Human Services issued a Request for Information, seeking public comment on deals (including those not reportable for antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act) involving health systems, private payers, private equity funds and other alternative asset managers for health care providers, and health care facilities, ancillary products, and services. And in April 2024, the same agencies jointly launched, an online hub designed to facilitate reporting complaints about potentially anticompetitive practices in the health care industry. 

Active investigations and ongoing private litigation preview likely focus areas for the HCMC. Since 2022, the FTC has conducted a long-running investigation into Pharmacy Benefits Managers (PBMs) and their effects on prescription drug costs. In late February 2024, reports broke of a DOJ investigation into UnitedHealth Group, including its relationship with its health-service arm Optum and Optum’s acquisition of doctor groups. This investigation follows claims filed against Optum in California federal court for attempted monopolization of the primary care market in parts of that state. More recently, several major insurers were sued in a putative class action alleging that they formed a cartel by deploying the same algorithm to determine the reimbursement rates paid to out-of-network providers. Not only will the HCMC likely look to these and other private litigation as sources for potential investigations, but its own enforcement efforts will likely inspire future private follow-on cases.

Implications for Health Care Companies

Despite its purported focus on “giants,” companies of all sizes and in all segments may feel the effects of the HCMC as it investigates a wide array of conduct across the health care industry, from mergers and acquisitions to potentially anticompetitive agreements. In addition to antitrust violations, investigations can often lead to the discovery of other types of suspected violations, as illustrated by numerous fraud cases brought by the Procurement Collusion Strike Force, formed in 2019 to investigate anticompetitive conduct in public procurement. 

Accordingly, health care and health-care-adjacent businesses should take appropriate steps now to mitigate the risks of investigation and enforcement actions. This includes investing in a robust compliance program that specifically covers antitrust training. In addition, companies should establish internal compliance hotlines and reporting procedures to encourage the prompt identification of potential problems before they are reported to the HCMC.

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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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