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The Federal Trade Commission:

The Federal Trade Commission:. Antitrust Enforcement in Healthcare Markets. Christine L. White Staff Attorney Northeast Regional Office July 30, 2011. Thank you for the opportunity to participate in this public hearing.

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The Federal Trade Commission:

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  1. The Federal Trade Commission: Antitrust Enforcement in Healthcare Markets Christine L. White Staff Attorney Northeast Regional Office July 30, 2011

  2. Thank you for the opportunity to participate in this public hearing. These materials and my oral statements and responses are my own and do not necessarily reflect the views of the Commission or of any Commissioner. Preliminary Comments

  3. Agenda • Introduction A. Describe the Federal Trade Commission B. Identify Consumer Benefits Associated with Antitrust Enforcement in Healthcare Markets • Describe the FTC’s Enforcement and Other Antitrust Activities in Healthcare Markets • Discuss the Role of Competition in Healthcare Reform

  4. Introduction

  5. The Federal Trade Commission • Independent agency, established in 1914 to enforce the Federal Trade Commission Act, 15 U.S.C. § 45. • Charged with preventing unfair competition and unfair or deceptive commercial acts or practices. • Broad enforcement jurisdiction, covering numerous markets and industries. • The FTC has investigated conduct and mergers in the healthcare industry since the 1970’s. • U.S. DOJ and state attorneys generals also active in healthcare antitrust enforcement.

  6. The Purpose of Antitrust Law • Prevent private business agreements and practices that unreasonably restrain competition. • Promote markets that benefit consumers: • Lower prices • Better quality • Increased choice, selection, convenience, and innovation

  7. Antitrust Enforcement and Healthcare Markets • Competition achieves the most socially desirable allocation of resources, lowest prices and highest quality. • Market participants respond to financial and competitive incentives. • The antitrust legal framework is flexible enough to accommodate the unique aspects of the industry.

  8. Competition Benefits Healthcare Consumers • Consumer benefits include: • New healthcare financing and delivery mechanisms. • New and improved drugs. • Cheaper generic drugs. • Treatments with less pain and fewer side effects. • Treatments offered in a manner and location consumers desire.

  9. Antitrust Enforcement • Prevents or stops anticompetitive agreements that raise prices above competitive levels. • Eliminates market barriers and spurs innovation that improves care, expands access, and promotes lower costs. • Protects competitive processes, not particular providers, products, services or business models. • Great flexibility for providers and payors to develop and implement new products and services, as well as novel financing and delivery arrangements without raising antitrust concerns.

  10. FTC Enforcement and Other Antitrust Activities in Healthcare Markets

  11. FTC Enforcement Activities • Pay-for-Delay* • The FTC challenges these agreements in court and supports legislation to prohibit such settlements. • Merger Enforcement* • To prevent (1) accumulations of market power as well as (2) consolidations that reduce or eliminate competitors’ incentives to innovate. • Price-Fixing and Group Boycott Cases* • The FTC distinguishes between legitimate collaborations intended to promote quality and achieve cost-savings and those designed to and having the effect of obstructing competition. * Seehttp://www.ftc.gov/bc/healthcare/antitrust/hcupdate.pdf and http://www.ftc.gov/bc/healthcare/antitrust/rxupdate.pdf.

  12. FTC’s Enforcement Mechanisms • Most antitrust violations found by the FTC are resolved through consent agreements. • In the event of litigation, the FTC often adjudicates through administrative hearings. • Administrative hearings offer a special forum to address matters that raise complex legal and economic issues. • Commission decisions may be appealed to the federal courts of appeal. • Commission also may seek injunctive relief pending administrative hearings.

  13. Agency Guidance • Statements of Antitrust Enforcement Policy in Health Care (1996) • Competitor Collaborations Guidelines (2000) • Improving Health Care: A Dose of Competition (2004) • Revised Horizontal Merger Guidelines (2010) • Proposed ACO Statement (2011) • Advisory Opinion Letters (2002 - present): • MedSouth (2002) and Follow Up Letter (2007) • Suburban Health or “SHO” (2006) • GRIPA (2007) • TriState (2009)

  14. FTC Healthcare AntitrustWorkshops and Hearings • Another Dose of Competition: ACOs and Antitrust (2011) • Joint FTC, OIG and CMMS Workshop on Issues Related to ACOs (2010) • Innovations in Healthcare Delivery (2008) • Clinical Integration in Healthcare: A Check-Up (2008) • Competition Provided by Developing an Abbreviated Regulatory Approval Pathway for Follow-On Biologic Drugs (2008) • Competition Among Health Care Providers Based on Quality Information (2008) • FTC/DOJ Hearings on Health Care and Competition Law and Policy (2003)

  15. Inter-Agency Coordination • FTC routinely works with other state, federal and international agencies. • Issues studies and reports analyzing competition issues raised by proposed state and federal regulation of healthcare markets. • Coordinates with attorneys generals in connection with investigations and enforcement actions.

  16. Looking Forward:Antitrust and Healthcare Reform

  17. Accountable Care Organizations • CMS’s Shared Savings Program specifies that groups of providers in an ACO “. . . meeting [specified] criteria . . . may work together to manage and coordinate care for Medicare . . . beneficiaries” and may receive payments for shared savings if the ACO meets certain quality performance standards.” See PPACA, Section 3022. • Antitrust compliance required. • Competition between ACOs encouraged.

  18. ACOs Participating in CMS’ Shared Savings Program • CMS’ proposed Rule requires ACO to use: • Formal legal structure. • Management and leadership for clinical and administrative processes. • Reporting on cost and quality measures. • Evidence-base, patient-centered coordinated care. • Similar to traditional integrated entities – in terms of goals and means.

  19. Proposed FTC and DOJ ACO Antitrust Enforcement Policy • Clarifies antitrust analysis. • Establishes rule of reason analysis for ACOs. • Creates new ACO Safety Zone. • Coordinates with CMS application and review process. • Streamlines analysis for expedited ACO review.

  20. Ongoing Inter-Agency Coordination • Proposed ACO rules and guidance were issued by the FTC and DOJ, the OIG, and CMS on March 31, 2010. • The public comment period ended on May 31, 2011. • The Agencies are reviewing comments received. • Inter-agency coordination, including FTC, DOJ, OIG, and CMS, is continuing.

  21. www.ftc.gov

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