Government Enforcement Update

In a speech before the American Bar Association’s Antitrust in Healthcare conference, held last week in Virginia, Deputy Assistant Attorney General Barry Nigro offered the Department of Justice’s (DOJ) most recent statement on its role in healthcare antitrust enforcement. While Nigro announced no significant changes in policy, the speech reemphasized DOJ’s commitment to antitrust enforcement in healthcare and gave further insight to this administration’s enforcement priorities.

At the outset, Nigro commented on the significant size and scope of the healthcare industry in the U.S. economy, and the central role the industry plays in Americans’ quality of life. Stating that “few if any segments of our economy merit higher priority when it comes to antitrust enforcement” than healthcare, Nigro highlighted several areas of focus.

  • Criminal enforcement. Nigro described criminal violations as the “pernicious antitrust offenses” and the area “about which [DOJ is] most concerned.” He characterized price fixing and “naked market allocation agreements” as “effectively agreements to steal from consumers (whether in the form of higher prices, lower quality, or fewer choices)” that have “no procompetitive justification.” After reviewing several recent criminal enforcement cases, Nigro said the Antitrust Division of DOJ would combat rising healthcare prices and use its criminal enforcement authority “to police these markets, and to promote competition.”
  • Civil enforcement. Nigro spoke at length on DOJ’s civil enforcement activity in this area as well. Highlighting DOJ’s role in blocking two major insurance mergers—Anthem’s proposed $54 billion acquisition of Cigna and Aetna’s proposed $37 billion acquisition of Humana—Nigro characterized them as significant victories that prevented higher prices for consumers. In addition to insurers, Nigro cited several similar actions to challenge anti-competitive behavior by providers, including the ongoing litigation with Atrium Health and earlier settlement with Henry Ford Allegiance Health in Michigan.
  • Protecting taxpayers. Nigro next reaffirmed DOJ’s commitment to actions for damages on behalf of taxpayers, utilizing in particular the treble damages provisions in the Clayton Act (for litigants who have been harmed by antitrust violations) where appropriate.
  • Limiting Exemptions and Immunities. Nigro took particular aim at limiting exemptions and immunities from antitrust laws. In the last several years, the DOJ and FTC have challenged several activities undertaken by private actors claiming “state action” immunity (for example, the successful challenge to the North Carolina Dental Board’s claimed immunity). Specific to healthcare, he noted that state certificate-of-need laws are often a subject of DOJ competition advocacy because they generally prohibit entry to markets and diminish competition, which ultimately benefits existing providers but harms consumers.
  • Group conduct. Finally, Nigro offered extended commentary on various types of group conduct that present anticompetitive risk. He highlighted, for example, occupational licensing requirements that unduly restrict access without commensurate benefits to health and safety. Among the examples noted were the Antitrust Division’s input on telehealth proposal in Michigan and proposed optometry and ophthalmology requirements in Massachusetts and Puerto Rico.

Analysis

Unlike several recent speeches and memorandums by DOJ officials, Nigro’s speech did not announce a new policy or mark an explicit change in enforcement approach. Coupled with the Antitrust Division’s activity over the last year, however, it does highlight the continued focus on the healthcare industry despite other more publicized enforcement priorities. In fact, Nigro noted that “antitrust enforcement will continue to play an outsized role in healthcare.” While it remains too early to draw firm conclusions, healthcare transactions that implicate industry concentration or healthcare practices and restraints that have potential anticompetitive effects are certain to continue to face significant scrutiny from the DOJ.