DOJ Antitrust Division Grants Approval to Proposed Cigna/Express Scripts Merger

Posted in Antitrust, Healthcare M&A, Joint Ventures, Transactions & Health Ventures

On September 17, the United States Department of Justice (DOJ) Antitrust Division issued a “closing statement” in which it announced that it was closing its investigation into Cigna’s proposed acquisition of Express Scripts, a transaction valued at $67 billion. The announcement states that “After a thorough review of the proposed transaction, the Antitrust Division has determined that the combination of Cigna, a health insurance company, and ESI, a pharmacy benefits management (“PBM”) company, is unlikely to result in harm to competition or consumers.” Notably, the announcement brings to an end a six-month investigation by the Antitrust Division, during which it reportedly reviewed over two million documents received from the merging parties and interviewed over one hundred industry participants. Continue Reading

FTC Announces Settlement of Antitrust Action Against Therapist Staffing Company Accused of Fixing Therapist Wages

Posted in Antitrust, Government Affairs, Licensure & Regulatory

In the Matter of Your Therapy Source, LLC – is the most recent example of federal antitrust enforcers’ increasing interest in curtailing anticompetitive conduct in employee markets, which was first announced when the Federal Trade Commission (FTC) and the Department of Justice (DOJ) issued guidance on the subject in late 2016. See Antitrust Guidance For Human Resource Professionals (available here). On July 31, the FTC announced that it had reached a settlement with a Texas therapist staffing company that the FTC alleged had agreed with a rival staffing company to reduce the compensation paid to their therapist employees.

In the Therapy Source matter, the FTC accused Sheri Yabray, the owner and CEO of Therapy Source, a Dallas therapist staffing company, of conspiring with Neeraj Jindal, the owner of a rival company, to reduce the rates paid to their physical therapists and physical therapist assistants.  Specifically, the FTC Complaint alleges that, in response to a reduction in the fees that the staffing companies were receiving from insurers, Mr. Jindal and Ms. Yabray sought to reduce the rates paid to their therapist employees. After Mr. Jindal shared his proposed new rate schedule with Ms. Yabray in a text message, she allegedly responded by texting “Ok, we are going to lower [physical therapist rates] to your numbers.” The Complaint further alleges that Ms. Yabray subsequently sent text messages to other therapist staffing companies in the Dallas/Fort Worth area encouraging them to join in the agreement as well. Continue Reading

How the Trump Tariffs Affect Healthcare

Posted in Government Affairs, Licensure & Regulatory

It’s not just pile drivers, combines, and frozen fish. Much of the news coverage has discussed how industrial and agricultural products are subject to new Trump administration tariffs on goods imported from China.  However, the list of Chinese products subject to the new tariffs also includes goods more familiar to healthcare providers: items like pacemakers, rubber medical gloves, MRI and CT machines, and sterilizers.

Since April 2018, the United States Trade Representative (USTR) has announced three lists of Chinese products that will be subject to 25% tariffs.  Together, the lists cover $250 billion of imports from China.  Tariffs on the first list of goods are already in effect, and imposition of tariffs on the second and third lists is in progress.

Under the direction of President Trump, USTR has the power to impose trade sanctions on foreign countries under section 301 of the Trade Act of 1974, codified at U.S. Code title 19, section 2411. The tariffs are based on what the USTR has determined are discriminatory trade practices by China, including forced transfer of American intellectual property to Chinese firms and stealing of American trade secrets through attacks on companies’ computer networks. Continue Reading

House Commerce Committee Urges the FTC to Investigate Past PBM Mergers

Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare M&A, Joint Ventures, Transactions & Health Ventures

The leadership of the House Energy & Commerce Committee has called upon the Federal Trade Commission to undertake a retrospective review of past mergers involving pharmacy benefit managers (PBMs). Specifically, in a July 27 letter to FTC Chairman Joseph Simons, House Commerce Committee Chairman Greg Walden (R-OR) requested that the FTC examine “(1) how these mergers have affected downstream prices for consumers and (2) whether these mergers have helped PBMs save plan sponsors money.”

The Commerce Committee’s request follows a February 14 hearing on the effects of consolidation in the healthcare industry generally, in which several witnesses testified that the competitive impact of several large mergers in the PBM industry over the last decade (which ultimately created what are today Caremark, Express Scripts and Optum Rx) were somewhat unclear. The letter cites a 2016 report that concluded that PBMs help plan sponsors generate savings by, among other things, reducing waste, negotiating discounts and encouraging the use of generic drugs. However, the letter also notes that other reports suggest that, in some circumstances, consolidation among PBMs may have led to an increase in drug costs and increased co-pays for insureds. Given these opposing views, several witnesses, including Professor Leemore Dafny, who previously served as the Deputy Director for Healthcare and Antitrust in the FTC’s Bureau of Economics, expressly suggested that a retrospective review of these mergers by the FTC would likely be beneficial. Continue Reading

States Begin to Hold Hearings on the Proposed CVS/Aetna Merger

Posted in Antitrust, Government Affairs, Licensure & Regulatory, Health Insurers & Managed Care Organizations, Healthcare Law, Healthcare M&A, Joint Ventures, Transactions & Health Ventures, Pharmacy, Drugs, Medical Devices & Equipment

In December of 2017, CVS Health and Aetna announced their intention to merge. The transaction, if approved by regulators, would combine the country’s second largest pharmacy benefit manager (PBM), Caremark – a CVS subsidiary – and the nation’s third largest commercial health insurer, Aetna, and has been valued at $69 billion. Since the announcement, federal and state regulators have been investigating whether this “vertical merger” raises any significant antitrust concerns, and a hearing at the federal level – before a United States Judiciary Committee subcommittee – was held in late February. More recently, a good deal of activity has started to occur at the state level.

Specifically, on June 19, California Insurance Commissioner Dave Jones held a lengthy hearing on the deal, inviting over ten witnesses to appear and express their views on the deal.  Commissioner Jones heard from representatives from the merging parties, academia, various provider groups (including the AMA and the California Medical Association), and consumers (including Consumers Union and Consumer Watchdog) regarding their views of the proposed deal. Continue Reading

Will President Trump’s Supreme Court Pick Have an Influence on The Healthcare Industry?

Posted in Antitrust, Government Affairs, Licensure & Regulatory, Health Insurers & Managed Care Organizations

On July 9, 2018, President Trump announced his intention to nominate D.C. Circuit Court Judge Brett Kavanaugh to replace retiring Justice Anthony Kennedy on the Supreme Court. Since the announcement, there has been considerable discussion about what Judge Kavanaugh’s views are on several “hot button” issues, including free speech, religious-rights and abortion, and how Judge Kavanaugh might influence the law on those subjects if confirmed. Less attention has focused – at least so far – on Judge Kavanaugh’s healthcare-related decisions, notwithstanding that he has authored several high-profile decisions in that area. If confirmed, these opinions may well provide a window into Judge Kavanaugh’s thinking on several high-profile antitrust issues in healthcare, including the proposed mergers between CVS and Aetna and Express Scripts and Cigna.  Continue Reading

Florida Imposes new ID Requirements for Pharmacist Dispensing of Controlled Substances

Posted in Healthcare Law, Pharmacy, Drugs, Medical Devices & Equipment

The Florida legislature passed HB 21, which imposes a number of new requirements on prescribers and pharmacists regarding controlled substance prescribing and dispensing. Part of the law requires pharmacists to verify the identity of the person named on the prescription. These requirements do not apply in an institutional setting or to a long-term care facility, including assisted living facilities or in-patient hospitals.

The following steps are required to satisfy the identification requirements when dispensing controlled substance prescriptions in Florida.

  1. If the patient is known to the pharmacist, then verifying a government issued photo ID is unnecessary;
  2. If the patient is not known, the pharmacist must:
    • Have the patient present valid government issued photographic identification or other verification of his or her identity of one of the types of identification set forth in 8 C.F.R. s. 274a.2(b)(1)(v)(A) and (B) – this is a detailed list of ID types that can be used; or
    • If the patient does not have proper ID, verify the validity of the prescription and identity of the patient with the prescriber or his or her agent; or
    • For prescriptions billed through insurance, the pharmacist may query the system to determine health plan eligibility through a real-time inquiry or adjudication system.

Click here to view a graphical description of the ID process.

FDA Ponders Health and Safety of Lab-Grown Meat

Posted in Government Affairs, Licensure & Regulatory

The hamburger of the future might be less Old MacDonald and more sci-fi – and it might be here sooner than you think. Several startups are working to scale up animal cell culture technology to grow meat tissue for human consumption. Proponents hail the nascent industry’s potential to reduce foodborne illnesses such as E. coli, lessen the environmental impacts of conventional animal agriculture, and prevent animal suffering. As a result, the U.S. Food and Drug Administration is exploring how to regulate such products.

Regulatory questions abound. For example:

  • What public health and safety hazards might be caused by cultured meat, and how do they differ from those caused by conventional, whole-animal meat?
  • What manufacturing processes should be followed to keep these new products free from pathogens and other contaminants?
  • What additives, preservatives, or other substances, if any, should be allowed in the production of meat from cell culture technology?
  • How should the new products be labeled? Should labels disclose whether a product is grown from cell cultures?
  • Should producers be allowed to call their products “meat”, or should a separate term be used to distinguish conventional meat versus cultured meat?

The FDA announced a public meeting scheduled for July 12, 2018 to address these topics. FDA could choose to propose industry regulations in the near future. Any such regulations would need to be in concert with the USDA, which currently oversees the slaughter and manufacturing of conventional meat products.

Per se versus ‘Rule of Reason’ Standard: Judge in Blue Cross Antitrust MDL Proceeding Certifies His Decision For Interlocutory Appeal

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Litigation

In a somewhat unexpected but highly significant move, United States District Judge David Procter (Northern District of Alabama), who is presiding over the In re Blue Cross Blue Shield Antitrust Litigation (Case No. 2:13-cv-20000, N.D. Alabama), has granted defendants’ request that he certify his ruling that the defendants’ alleged conduct should be assessed under a per se standard (and not the “rule of reason”) for immediate interlocutory appeal to the 11th Circuit Court of Appeals. So, unless the 11th Circuit rejects Judge Procter’s request, it appears that we will receive an appellate court decision on this issue prior to the entry of a final judgment in this massive, and closely watched, action.

The multi-district litigation matter, which is now almost five years old, combined over 80 separate lawsuits from all across the country into two putative classes of plaintiffs – a subscriber class and provider class – and, as Judge Procter has noted, is “reportedly one of the largest (if not the largest) antitrust litigations ever filed.” As Judge Procter has further explained, in all of these cases, “the plaintiffs allege that the defendants (virtually all of the Blue Cross Blue Shield insurers across the nation – “the Blues”) have violated the antitrust laws by agreeing to allocate exclusive geographic service areas, imposing output restrictions, fixing prices for certain products and services secured from health care providers, and boycotting health care providers who reside outside of a Plan’s allocated geographic service area.”  In an April 5 decision, the Court held that “Defendants’ aggregation of a market allocation scheme together with certain other output restrictions is due to be analyzed under the per se standard of review,” a ruling that would permit plaintiffs to prove liability in the case against the Blues simply by showing that the defendants entered into such an agreement, without being required to prove that the effect of any such alleged agreement was anticompetitive and/or counterbalanced by procompetitive benefits (unlike in a “rule of reason” case, which would require such additional proof). Recognizing the significance of the ruling, the Blues quickly filed a request that they be permitted to appeal the decision to the 11th Circuit, rather than await a final judgment in the matter. Continue Reading

Pharmacies Accuse Drug Maker of Anticompetitive Contracting to Restrict Biosimilar Market

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Litigation, Pharmacy, Drugs, Medical Devices & Equipment

Walgreens and Kroger have filed an antitrust action in the United States District Court for the Eastern District of Pennsylvania accusing Johnson & Johnson (J&J) of engaging in anticompetitive conduct designed to stymie the growth of biosimilar alternatives to J&J’s Remicade, a biologic drug used to treat certain chronic immune disorders (Walgreen Co. v. Johnson & Johnson, Case No. 2:18-cv-02357-JCJ, Eastern District of Pennsylvania). The action is only the latest in a string of suits filed against J&J challenging its sales practices relating to Remicade. Pfizer, the maker of Inflectra, a biosimilar alternative to Remicade, previously filed an action against J&J making similar claims, as did a number of union benefits funds. Several of these previously-filed actions have already been consolidated in the Eastern District of Pennsylvania as the In re Remicade Antitrust Litigation, Case No. 2:17-cv-4326, JCJ, before Judge J. Curtis Joyner. In all likelihood, the Walgreens case will be referred to Judge Joyner and become part of the consolidated action as well.    Continue Reading