In her remarks, Mekki stated that maintaining support for these policies “is like maintaining the kinds of specifications we develop for cassette tapes and DVDs and then applying them to digital music streaming.”
On February 2, 2023, Principal Deputy Assistant Attorney General Doha Mekki announced that the U.S. Department of Justice (DOJ) is withdrawing its support for three policy statements that have permitted certain “safety zones” of information sharing between competitors in the healthcare industry. DOJ released a statement the following day formally announcing the withdrawal. The three withdrawn policy statements are:
- Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area (September 15, 1993);
- Statements of Antitrust Enforcement Policy in Health Care (August 1, 1996); and
- Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (October 20, 2011).
- While the courts have recognized pro-competitive effects of information exchange, DOJ is signalizing that certain information once considered safe-to-be-shared may now be considered anti-competitive.
- Businesses should consider revising antitrust training and policies, in particular for employees that (i) participate in trade associations or industry groups or (ii) exchange information with customers or suppliers in marketplaces where those firms could also be considered potential or actual competitors.
- The withdrawal of the healthcare policy statements coincides with several more aggressive enforcement agendas previously announced by the agencies, including closer scrutiny of healthcare mergers and the industry in general, limiting information sharing relating to wages and addressing concerns regarding the use of pricing algorithms that may result in some type of price coordination.
- Companies should also use caution in relying on any guidance from the antitrust agencies that pre-dates the Biden administration and should consult with experienced counsel to help them navigate this rapidly changing enforcement landscape.
How Does Withdrawal of These Statements Impact the Healthcare Industry?
In her remarks, Mekki stated that maintaining support for these policies “is like maintaining the kinds of specifications we develop for cassette tapes and DVDs and then applying them to digital music streaming.” For example, she suggests that modern data aggregation, machine learning and pricing algorithms call into question prior conclusions about the extent to which data at least 3 months old is likely to be competitively sensitive or subject to competitive concerns.
The three policy statements provided “antitrust safety zones” in which the DOJ and Federal Trade Commission (FTC) would or would not challenge, among other things, certain hospital mergers, joint ventures and information-sharing arrangements, including widely accepted exchange of aggregated data on pricing and costs in the healthcare industry, and wage information. In the DOJ’s statement announcing withdrawal of its support, Assistant Attorney General Jonathan Kanter noted that “the healthcare industry has changed a lot since 1993, and the withdrawal of that era’s out of date guidance is long overdue.” Mekki specifically noted that the dynamics of the healthcare industry have changed since the policy statements were issued―both in the industry’s new focus on healthcare data and technological innovation and as a result of consolidation between health insurance companies, providers, pharmacy benefit managers and health data analytics companies.
There is no plan to replace the policy statements and no discussion of the pro-competitive effects of appropriately structured information exchange to enhance competition as recognized by the courts, as well as long-standing antitrust agency enforcement policy. The speech did not offer criticism of the structure of Accountable Care Organizations (ACOs) established consistently with the 2011 statement on safety zones and relying on data published by the Centers for Medicare & Medicaid Services (CMS). Nevertheless, the withdrawal of the 2011 statement issued in conjunction with CMS rules removes safety zones as a matter of DOJ enforcement policy and thus requires ACOs to refocus on antitrust risks and compliance, particularly as to any information sharing on cost, pricing or wages.
In light of the withdrawal of these “safety zones,” healthcare companies will need to reconsider the antitrust implications of pursuing certain transactions and of participating in certain information-sharing arrangements.
Broader Implications for Information Sharing
While the specific policy statements that DOJ withdrew (and that the FTC is also expected to withdraw) focused on the healthcare industry, the long-standing aggregation of safety zones had been broadly applied in other industries by those seeking to avoid antitrust concerns while achieving the pro-competitive effects of information exchange. Mekki’s remarks signaled more widely that DOJ intends to increase scrutiny of anti-competitive exchanges of competitively sensitive information. Traditionally, information sharing in highly fragmented industries, involving more historical or aggregated data, tended to draw significantly less scrutiny than sharing current, specific price and cost data in a concentrated marketplace. But Mekki referred to these factors as simply “helpful screens” while noting that “there may be markets and industries where long-held sensibilities about when information exchanges are more benign than harmful are insufficiently sensitive to market developments and thus fail to capture the broader range of harm in the modern economy.” Of particular concern is the use of pricing algorithms in conjunction with data both exchanged and available. Mekki further emphasized that mergers of firms in industries with any history of coordination or collusion would draw close scrutiny of coordinated effects―even below concentration levels that would result in a structural presumption of competitive harm.
The courts have recognized pro-competitive effects of information exchange. Absent some extraordinary factor, the courts have treated appropriately structured agreements to exchange information in competitive markets under the rule of reason. Nevertheless, information exchange may facilitate per se illegal price fixing, particularly in highly concentrated markets. Companies should consult with experienced counsel to help them navigate this rapidly changing enforcement landscape.
For More Information
If you have any questions about this Alert, please contact Sean P. McConnell, Sean S. Zabaneh, any of the attorneys in our Antitrust and Competition Group, any of the attorneys in our Health Law Practice Group or the attorney in the firm with whom you are regularly in contact.
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