DOJ withdraws long-standing healthcare antitrust enforcement policy statements

On February 3, 2023, the Department of Justice (DOJ) released a statement withdrawing three long-standing healthcare antitrust enforcement policy statements (together, the Policy Statements), which it jointly issued with the Federal Trade Commission (FTC) between 1993 and 2011. 

These Policy Statements established certain safe harbors or safety zones for when the DOJ and the FTC would not challenge conduct, including certain information sharing practices, under the antitrust laws.

In withdrawing the Policy Statements, the DOJ stated that they are “overly permissive,” and no longer reflected “modern market realities.”  It does not appear that the DOJ will replace them. Instead, the DOJ will apply a case-by-case approach to “better evaluate mergers and conduct in healthcare markets that may harm competition.”

While the FTC did not join the DOJ’s statement, the FTC has taken similar aggressive enforcement against healthcare companies lately, and it is anticipated that FTC may follow the DOJ’s lead and withdraw the Policy Statements as well.  The withdrawal of the Policy Statements leaves purposeful ambiguity in an already complex industry.

These actions are the latest development in an ongoing shift toward a more aggressive antitrust enforcement paradigm in healthcare markets. Because the healthcare industry as well as a wide range of other industries relied on the Policy Statements, the effects of this policy change will reverberate across industries. 

Background

Over the past 30 years, the Policy Statements helped clarify antitrust enforcement policy for the healthcare industry and beyond. The 1993 policy statement provided safety zones for certain hospital mergers and joint ventures, including information sharing practices.  In 1996, noting the ongoing changes in the healthcare market, the DOJ and the FTC provided additional guidance restating the 1993 policy statement, with a particular focus on guidance on physician network joint ventures and multi-provider networks more generally. Years later, the 2011 policy statement provided guidance on accountable care organizations (ACOs) participating in the Medicare Shared Savings Program. 

One of the most significant features of the Policy Statements was the “antitrust safety zone” for certain exchanges of price and cost information set forth in the 1996 Policy Statement.  That information exchange analysis became the basis for other DOJ and FTC guidance, including the FTC’s December 2014 guidance on information exchange and the DOJ and FTC’s October 2016 Antitrust Guidance for Human Resource Professionals.  The withdrawal of the 1996 Policy Statement, therefore, may have widespread implications for information exchange. 

Furthermore, the Policy Statements have allowed the healthcare industry to structure mergers and other joint ventures in ways to limit the risk of antitrust enforcement action.  In particular, the Policy Statements led to the proliferation of common arrangements for handling pricing and other information sharing and joint negotiations, such as through messenger models and clinically integrated networks.  Parties have carefully crafted these arrangements and refined them over the decades since these agencies released the Policy Statements and due to enforcement actions, advisory opinions and other guidance provided by these agencies.

In withdrawing these Policy Statements, DOJ expressly stated that the healthcare landscape has changed significantly and that the statements are “overly permissive on certain subjects, such as information sharing, and no longer serve their intended purposes of providing encompassing guidance to the public on relevant healthcare competition issues in today’s environment.” 

What’s next

Companies in the healthcare sector should expect continued aggressive antitrust enforcement actions.  It will be important to monitor how the FTC responds to the DOJ’s policy shift. The healthcare industry has faced intense scrutiny recently, and that scrutiny may now become less predictable and less transparent.    

The DOJ’s withdrawal of the Policy Statements does not change the law and, in particular, does not affect what conduct is a per se violation of the Sherman Act.  However, it does suggest that the DOJ may intend to more aggressively challenge information exchanges under the rule of reason standard.  Moreover, it suggests that the DOJ will be more likely to challenge information sharing practices that it would not have previously challenged. Additionally, the withdrawal of the Policy Statements by the DOJ comes at the same time that the FTC has indicated that it will use its “unfair methods of competition” authority under the FTC Act to challenge information exchanges that do not violate the Sherman Act. 

Despite the withdrawal of the Policy Statements, those policies may still provide a useful reference point for the healthcare industry going forward. Healthcare providers will now need to think outside the four corners of those safety zones and take into account case law, ongoing DOJ and FTC enforcement actions, and all the facts and circumstances of their specific arrangement (including the impact that the arrangement will have on their relevant markets).  Any healthcare provider relying on the safety zones for their clinically integrated network, financial risk sharing arrangement, upcoming merger or venture, or data and price sharing arrangements will need to reassess those arrangements in light of the current enforcement environment.  Given the DOJ’s express call-out in its brief February 3rd statement, this is especially true for information sharing practices. 

Accordingly, providers are encouraged to begin working with antitrust and healthcare counsel to carefully evaluate their arrangements to better gauge their antitrust risk while building in any new safeguards that may now be required, including proactively curtailing information sharing practices.  This is also the case for any other industry that has relied, in whole or in part, on the Policy Statements in assessing its antitrust risks and compliance.

If you have any questions about the DOJ’s withdrawal of the Policy Statements, please contact your DLA Piper relationship partner, the authors of this alert or any member of our antitrust or healthcare industry groups.