DOJ Pledges Robust Defense of Healthcare Competition

From busting fraudsters, to challenging mergers, acquisition and collusion by hospitals, payers and drug makers, antitrust enforcement remains a top priority for federal regulators.

The Department of Justice will continue to play "an outsized role" in healthcare antitrust enforcement, a federal prosecutor said this week.

In a keynote address at the American Bar Association's Antitrust in Healthcare Conference on Thursday, Deputy Assistant Attorney General Barry Nigro said DOJ will rigorously prosecute Medicare fraudsters and price gouging by drug makers, and continue to cast a skeptical eye toward mergers, potential collusion among health systems and payers.

"Competition in healthcare means being able to afford life-saving surgery, or critical medicines, or an infant's first checkup," Nigro said. "It's important. That's why few, if any, segments of our economy merit higher priority when it comes to antitrust enforcement."

"Because competition benefits consumers in so many ways, antitrust enforcement will continue to play an outsized role in healthcare. Competition keeps healthcare costs down, which broadens access to health care products and services," he said.

Nigro's lengthy speech covered no new ground, but reaffirmed DOJ Antitrust Division's civil and criminal policy and actions against fraud, and anticompetitive practices.

• On criminal prosecutions: "Criminal violations are pernicious antitrust offenses. Price fixing and naked market allocation agreements are effectively agreements to steal from consumers (whether in the form of higher prices, lower quality, or fewer choices) and have no procompetitive justification." 
   
• On generic drug regulations: "In recent years, there have been large price spikes for certain generic drugs — and the Division’s investigation into this market has revealed that some corporations and executives have sought to enrich themselves at the expense of consumers who rely on these critical medications. It is hard to imagine a more brazen antitrust crime than colluding to take money out of the pockets of seniors and others whose health depends on prescription drugs."
   
• On market allocation and no-poach agreements: "We believe it is important that we use our criminal enforcement authority to police these markets, and to promote competition for all Americans seeking the benefits of a competitive healthcare marketplace."
   
• On exemptions and immunities from the antitrust laws: "Exemptions and immunities should be limited. Often, when an industry is bestowed with an exemption or immunity, competition is displaced, or cabined, by government regulation.
  
  "The Division is skeptical of any claim that government regulation prevents competitors from exercising market power or that consumers do not benefit from the forces of competition to protect their interests."

• On defense of the Clayton Act: "Pursuing treble damages under Section 4A has two important benefits. First, it deters cartels and other anticompetitive conduct. Second, it compensates taxpayers for the harms the government suffers due to antitrust violations. We intend to exercise the authority Congress has provided and are actively considering cases in this industry to bring."
   
• On state action doctrine: "When the state action doctrine puts a potentially anticompetitive state regulation (or action pursuant to that regulation) beyond the reach of federal antitrust law, the Division has urged state legislatures to consider the negative effects on competition."
   
• On certificate of need: "Certificate of need laws allow regulators to second guess that business judgment. The new hospital may be profitable at the expense of incumbent competitors, but that is the essence of competition. Incumbent firms thus are the primary beneficiaries of certificate of need laws, and they can take advantage of these laws to thwart or delay entry or expansion by their competitors. Who suffers the consequences? Consumers."
   
• On licensing requirements: "Jointly with the FTC, we have urged state legislatures to carefully consider laws that impose occupational licensing requirements, and insure that any health or safety benefit from such requirements is balanced against the harms to competition such requirements may create." 
   
• On professional certification: "By receiving board certification, professionals in these fields can advertise to prospective patients that they have received extra training and thus, potentially, provide higher quality services. But, because certification sometimes becomes a de facto requirement for meaningful participation in a market for healthcare services, certification requirements can at times act as barriers to entry."