In the sixth installment of their popular annual series, John D. Carroll, Partner, Sheppard Mullin Richter & Hampton LLP, and Alexis J. Gilman, Partner, Crowell and Moring LLP, are joined by Carol Liu, Counsel, Axinn Veltrop & Harkrider LLP, to discuss 2023's biggest antitrust developments and what attorneys should expect in 2024. Sponsored by Axinn.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
In the sixth installment of their popular annual series, John D. Carroll, Partner, Sheppard Mullin Richter & Hampton LLP, and Alexis J. Gilman, Partner, Crowell and Moring LLP, are joined by Carol Liu, Counsel, Axinn Veltrop & Harkrider LLP, to discuss 2023's biggest antitrust developments and what attorneys should expect in 2024. Sponsored by Axinn.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
Support for A HLA comes from Axon, which brings unmatched depth in the skills needed to address healthcare , collaboration and competition. They are one of the best known antitrust firms in the world. With more than 60 full-time competition lawyers, they represent companies across the healthcare universe and help clients avoid antitrust landmines, complete mission critical deals, and protect their interests in litigation and investigations. For my information, visit axon.com.
Speaker 2:Welcome to ALA's Antitrust Area Review podcast for 2023. My name is Carol Liu . I'm counsel in the New York Office of Axon Troop and Har writer , and I'm very pleased on behalf of Axon to be sponsoring this podcast. With me today are two esteem members of the Antitrust Bar, Alexis Gilman and John Carroll. Um, to those who are familiar with these podcasts, I believe this one is the sixth year in the running. So thanks for tuning in. Um, and today we're bringing you the top 10 antitrust healthcare developments from 2023 and Top 10 Things to Watch out for in 2024. So, without further ado, I'll let Alexis and John introduce themselves.
Speaker 3:Thanks, Carol. This is Alexis Skillman. I'm a partner in the Antitrust and Competition Group at Kroll and Morian , Washington, dc Uh, practice focuses on a range of civil antitrust matters with a , a big focus on , uh, healthcare transactional matters and regulatory approvals in front of the D-O-J-F-T-C and state ags. And before that , um, overlapping with John's time there , uh, I spent some time at the Federal Trade Commission, including three years as head of the mergers for division there.
Speaker 4:Happy New Year everybody, and good to be doing this with you again, Alexis. Uh, I'm John Carroll. I'm a partner, the Antitrust and Competition Group in Washington, DC at Shepherd Mullen , uh, and also focus on civil , uh, antitrust matters as well as criminal and my practice. Um, while it's varied , does involve quite a bit of , um, healthcare, antitrust enforcement and, and transactions, and really looking forward to doing this for the sixth year.
Speaker 2:All right . To start things off, we're going to go through the top 10, 20 23 healthcare development. And I tell you, it is a real effort to narrow this down list down to 10 developments because there are a lot going on. We'll be starting from the 10th on the list. What is the 10 biggest, the 10th biggest development in antitrust here? I'll hand it over to John .
Speaker 4:Great. Thanks so much, Carol. Um, number 10, we're gonna start off with pharma and, and, and do wanna briefly echo what you just said. I think we came up with something like 20 developments or 15, and to get these down to 10 in 2023 was, was a challenge. So really active year, particularly at the government , um, enforcement , uh, in the government enforcement arena. Uh, and number 10 is consistent with that. So number 10, starting us off with pharma. Um, wanted to talk briefly about the, the Orange Book Policy and Enforcement Actions , uh, undertaken by the Federal Trade Commission. So in the fall of, of 2023, October, to be precise , uh, the Federal Trade Commission, the FTC , uh, issued a policy statement , uh, that warned practitioners and, and those in the industry that the FTC would be scrutinizing what they may characterize as improper submission of patents listed in the Orange Book. Uh, and that such improper listings may harm competition from generic alternatives to keep brand prices quote artificially high. Uh, for those in our audience listening in who may not know what the Orange Book is at bottom, the Orange book is, is just a list of drug products that have been approved by the FDA , uh, as safe, as effective , as as safe and effective. And when a branded pharma company lists a patent for a drug , um, in the Orange Book that may lead to a stay, a statutory stay, that that generally speaking, you know, blocks the introduction of competing drug products for 30 months , um, including those from generic , uh, drug companies, which may be lower in price. And so the FTC, again was warned folks , um, in the industry , uh, in , in the fall, that that listing patents improperly maybe , uh, anti-competitive and thus be antitrust violations. Following up on that , um, I believe it was just a , a few weeks later , um, the FTC challenge more than 100 patents held by , uh, manufacturers of brand name drugs and , and , and devices including inhalers, autoinjectors, and other products that , um, according to the FTC were improperly or inaccurately , uh, listed in , um, the Orange Book. And the long name for the orange book, by the way, is the Approved Drug Products and Therapeutic Equivalent Equivalent Evaluations. And so , uh, the FTC , uh, brought that enforcement action. They also notified the FDA , that it disputes the accuracy or relevance of listed information of these patents. And so, number 10, again, starting off with pharma , uh, talking about the Orange Book , uh, there's a lot more that went on in pharma as well that we could try to shoehorn in here, <laugh> , including , uh, you know, some action in the PBM and generic space. But we'll leave it at the Orange Book for now. Carol, back to you.
Speaker 2:All right , thank you, John. And then talking about development in the healthcare world, of course, we have to talk about hospital mergers . Uh, Alexis, will you take us the number nine?
Speaker 3:Yeah , so we have a number nine. Um, the FTC in California , uh, department of Justice's challenge to block John Muir Health's proposed acquisition of San Ramon Regional Medical Center from tenant . Um, that deal after the challenge was subsequently abandoned. And while FTC and state ag challenges to provider mergers are nothing new, we've covered them , uh, pretty extensively in this podcast. And, and I'm sure our audience follows along. Um, and we didn't get a court opinion in the case. I think we've still put it up here on a list for a couple reasons that make this case interesting. First, and, and maybe most notably, John Muir actually already had a 49% interest in San Ramon. The hospital is proposing to acquire , uh, the rest of, and tenant owned the remaining 51%. And John Muir actually also had this minority interest , uh, acquired in 2013 in a , in a deal that was evidently reported to, or at least reviewed by the FTC and cleared, or at least more accurately wasn't challenged by the FTC at the time. And I'm not sure we've seen a , a fact pattern in the provider merger enforcement space quite , quite like this, where minority interest holder proposes to acquire substantial minority interest holder proposes to acquire the , the rest of a , a joint venture hospital. So , um, no free pass there apparently. Second , uh, the complaint shows that the government wasn't giving much credit to Kaiser being a meaningful competitor in the marketplace, even though it had a hospital located right between the parties, emerging parties, hospitals, and had another hospital in the general area. I think for a while, and John, I dunno if your experience is different, I think it's been a bit of an open question about how the FTC would treat Kaiser as a, you know, vertically integrated system in, in a hospital merger case. And here in this complaint that that FTC in the AG took the position that Kaiser quote does not compete directly with other hospitals in the market and would serve quote , as only an attenuated constraint. So I think that's a notable position or allegation coming out of this case, and it would've been interesting to see what the district court thought of that. Um, but I think these two aspects are worth keeping in mind, especially for providers in California contemplating a deal.
Speaker 4:I agree, and I'm gonna refrain from editorializing <laugh> on , on the Kaiser point, but that sounds , sounds good . That's my , that is my read of the complaint as well. It would've been interesting to see that litigated. Uh , but yeah, I, I agree.
Speaker 2:All right , now we're on to number eight on our list. This is an interesting one, John, will you take us through?
Speaker 4:Sure. And we got in just under the wire on this one. Um, on December 29th , uh, of last year, 2023, after a a two week , roughly two week , uh, hearing and closing arguments , um, the US District Court judge , uh, Edgardo Ramones , uh, issued an order granting , uh, the FTCs motion , uh, for a PI preliminary injunction in joining the equia , uh, propel Media merger. Um, back in July , uh, the FTC sued to block , uh, this deal, which was , uh, again, equia , if I'm, if I'm pronouncing that correctly , uh, from acquiring Propel Propel Media. Uh, sorry, Alexis, am I mispronouncing iqvia ? It might
Speaker 3:Be IQVI . That's my, it's
Speaker 4:Iqvia . I'm so sorry. I'm so sorry . That's
Speaker 2:My visit . That
Speaker 4:Company's IQA, I'm terrible with pronouncing things. So , um, back in July, in any event , uh, the FTC uh, uh, sought to block that deal. Um, according to the FTC , uh, it would give iqvia the, the , uh, the buyer here, a market leading position in programmatic advertising for healthcare products , uh, PR principally I think, prescription drugs to doctors and other healthcare , uh, professionals. So this isn't, you know, like the matter that Alexis just described, classic sort of provider merger, but it , it's a healthcare, it's in the healthcare space , uh, healthcare services space , um, more directly. Uh, and so FTC saw the , the , the PI over the summer , um, and they got it. Uh, and, and, and the deal , uh, has been abandoned over , uh, as far as I know , um, as of the end of, of last year. So , uh, a , a big win for the FTC and the healthcare antitrust space at number eight.
Speaker 2:Okay. Thank you, John. Number seven is a repeater from a p well, a repeating topic from last year's podcast, Copa Alexis, will one , give us , um, us any overview of that topic?
Speaker 3:Yeah, we're, we're going to Louisiana for a , a case that federalism and antitrust nerds will enjoy. Um, so this , uh, case came about last fall when a , a federal judge held that under the State Action Doctrine , uh, a hospital acquisition that was consummated pursuant to a Certificate of Public advantage or COPA, was exempt from the Federal Heart Scott Rodino Act , uh, pre-merger notification requirements. So , um, as background, Louisiana Children's Medical Center, LCMC , uh, was or had acquired three hospitals from HCA healthcare under a copa. Um, just as a quick refresher for folks who may not have , uh, followed along prior years or, or know much about copa , um, they're essentially a way for a state to create a process, state law process under which certain healthcare transactions can be notified and approved by the state, and effectively immunized from federal antitrust laws under principles of federalism that the Supreme Court has articulated. Uh, starting with Parker B Brown , um, there's specific elements that have to be met for the, you know, this state action doctrine to apply , which I won't cover here. But suffice to say, over the past seven years, there have been several hospital mergers that have been approved under these COPA laws. The FTCs unsuccessfully tried to object to them through the public comment process that usually applies , um, but , uh, it , for the most part, under the one that was abandoned , uh, the , the transactions have been approved under copa . So here, LCMC and HCA applied for a copa. And after a public comment process, the Louisiana Department of Justice reviewed it, received , uh, and , and gave COPA approval , uh, in December of 22. Then the hospitals closed the transaction in January of 23. Evidently, the FTC got wind of the deal, demanded that the parties submit an HSR filing because the relevant thresholds were met. Uh, the parties later filed a declared Troy Desmond , Ian Louisiana, saying the transaction wasn't subject to the HSR Act because they had the copa , the FTC sued in DC saying, you can't consummate the deal any further until you comply with HSR filing. Well, to make a, a long story short-ish , uh, the case was heard in Louisiana, and the arguments boiled down to, to this, the party said they were immune from federal antitrust law because the state action doctrine means thus , that just, that they're immune from all federal antitrust laws, including the HSR Act. And the FTC basically said there's no exemption for Cobas under the HSR Act. So you still have to , uh, file, and then you can argue you're , you're immune. The court held that while the State Action doctrine isn't an immunity per se, the transaction was exempt from HSR filing requirements because the, the , uh, requirements for the state action doctrine were met. So the FTC didn't repeals , uh, so a limitation there on the FT C's ability to require filings in COPA exempt transactions.
Speaker 2:Thank you, Alexis . Number six, John .
Speaker 4:Sure. So number six, we've got , um, more action from the FTC in the summer of 2023. Um, the FTC reached a proposed settlement with Surescripts and a monopolization case , uh, over the summer. Um , Alexis and I are actually, I think just I on these podcasts have talked about this matter before. This one goes back a few years. Um, back in the spring of 2019 , uh, the FTC had sued Surescripts , um, alleging that they had , uh, used certain , uh, vertical and horizontal restraints to maintain , uh, its monopoly over or over , uh, electronic prescribing, or what's called e-prescribing markets. So, routing and eligibility , uh, basically, you know, the market for , uh, routing ePrescriptions uses tech that enables providers to, to send electronic prescriptions directly to the pharmacies. Um, whereas the market for eligibility, which is the other part of this, allows the providers to determine electronically, again, the patient's eligibility for prescription coverage , uh, through access to insurance coverage and benefits information, usually through A PBM. And so the FTC had alleged , uh, again, back in the spring of 2019 , uh, that Surescripts had , uh, intentionally set out to keep its routing and eligibility customers on both sides of that market from , um, using any competing platforms , uh, which is called, you know, multi-homing, so that a number of , uh, you know, ex exclusivity agreements and, and according to the FTC, other quote , exclusionary tactics to try to limit the competition. So again , uh, sued back in 2019, you then had, you know, the litigation court denied Surescripts motion to dismiss , uh, in January 20. Uh, and then , uh, we go forward to March, 2023, where the FT FTC granted the FTCs motion for partial summary judgment and , uh, encouraged both the FTC and the parties or the party Surescripts to engage in settlement discussion went to mediation. Um , now they settled , uh, as of July. And , uh, there's a proposed order , uh, that governs that settlement. It's a 20 year term, and it has a range of provisions in it that seek to prevent Surescripts from , uh, engaging basically in the types of conduct, you know, through exclusive arrangements and the like , um, that were alleged in the FTCs case. So check out that order. But at the end of the day, the , the , the highlights of it are that Surescripts is prohibited from , um, entering into or enforcing contracts that impose a mark , a majority share market share requirement, preventing other , um, problematic quote , problematic provisions to limit customers to do business with their competitors. Um, a bunch of those and prohibit , uh, Surescripts from, you know, discriminating against customers who, who refuse to agree , uh, to the majority share requirement, bunch of other stuff in there as well. Um, that was , uh, uh, voted by the commission, accepted by the commission, approved by the commission, wherever you wanna say, three to three, to oh , and , uh, the, the , the , that was filed in the US District Court for the District of Columbia. So I think we've talked about this matter before. We can now say it <laugh> , it , it stays in the past, at least in terms of , uh, uh, unless there's an order violation, God forbid, but that this is something that , uh, has been resolved in, in this , um, long running monopolization case that had been brought by the FTC.
Speaker 2:Thank you, John . Number five is, again, a repeater on the list, and we believe we talked about this in last year's podcast as well, Alexis.
Speaker 3:Yeah, we're gonna talk about the Illumina Grail , um, case again, and I could frankly make a case that should be in the, the top three rather than five. But , um, uh, let's cover it here. So , uh, this one also just in time for the holidays , uh, was , uh, a case that went largely, not entirely, but largely in the FTCs favor. Uh , it got a win in the Fifth Circuit in , in a long running challenge the agencies had against the Illumina Grail vertical merger. Uh, and after that decision, the party subsequently abandoned the deal. And it has several interesting points, but let me just quickly catch folks up with a quick background, which is that Illumina is the largest provider of , uh, next generation gene sequencing or NGS platforms. And Grail had developed a multi cancer early detection test, an MCED test, they call it , uh, which used that MCED test use Illumina's NGS platform to run those tests. And the FTC sued to block the deal , claiming that the merger would hurt GRAIL's rivals who are also developing competing MCED tests. And the merch firm would allegedly do that either by foreclosing those rivals access to Illumina's system, or making it more expensive or degrading those competitors access to Illumina's NGS technology. Um, before trial, Illumina offered , uh, a remedy, it called it an open offer that committed to supply its NGS platform for 12 years at the same price and effectively on the same terms and access as Grail was going to get. Um, but the FTC sued anyway , uh, the FTC originally lost this case, actually in its own administrative trial court. The complaint counsel appeal it to the full commission, which not surprisingly reversed, and then the parties appeal to the Fifth Circuit. So , um, what's notable about the case? Well, first , uh, this is the first litigated vertical merger litigated to a decision that either the F TT C or DOJ has been able to stop , um, in decades now. It was through an abandonment rather than a court decision explicitly, but still , um, the agencies of the loss, I think the last three vertical merger cases, one's on appeal. So they awarded a fourth loss, which would've, I'd think set back their efforts to challenge vertical deals meaningfully. Um, second, the Fifth Circuit largely , um, validated the FTCs approach to analyzing that vertical merger and how it defined the market, how it analyzed the competitive effects of the merger, and in rejecting the party's efficiencies claim. Uh, the Fifth Circuit also turned away the party's constitutional claims. It raised against the FTCs authority, which is too in the weeds to cover here. Um, but the case wasn't entirely a home run for the FTC. The court actually vacated the FTCs divestiture order and remanded it for further consideration that the court basically said the FTC got the analysis wrong in how to analyzed the proposed remedy that Illumina had put forward. And specifically, the court said that the remedy should have been considered as part of defendant's rebuttal burden to the FTCs PRI facie case, and that it rejected what it called the FTCs Total Negation standard, meaning that the FTC was claiming that the remedy had to fully restore e competition to his , the exact same pre-merger state. And the court said, no, that's not right. It just has to ensure that there's no substantial lessening of competition. So take a big case because it's gonna bolster the agency's appetite to challenge vertical mergers. Uh, although on the other hand, there is a silver lining that emerging parties did get a little ammunition , uh, when litigating merg , uh, litigating the fixed merger cases. Carol,
Speaker 2:Thank you, Alexis. Speaking of number four , um, serial acquisitions and deals by private equity firms is certainly a focus in , uh, under the current administration, and number four is an interesting case in the healthcare field on that, John .
Speaker 4:Yeah, sure. Thanks Carol. Um, coming in at number four, we've got a relatively recent , um, action from FTC, and it's in the early stages. So , uh, just gonna have a , just the facts approach here based on what's publicly available, which is the FTC , um, uh, uh, in September of last year, su a private equity firm, Welsh Carson , um, and a , a practice the US anesthesiology partners , um, down in Texas, specifically in the Southern district. Um, the FTC was , uh, is alleging that those two companies quote , executed a , a multi-year and a competitive scheme to consolidate anesthesiology practices in Texas, drive up the price of anesthesia services provided to Texas patients and boost their own profit. So , um, challenging the, the quote unquote rollup strategy or serial acquisition , um, strategy that the, the PE firm was alleged to have engaged in with the , with the , uh, US anesthesiology partners. Um, according to the, the FTCs complaint , um, uh, USAP was founded in 2012. Uh, they executed a , a strategy to consolidate services in Texas by acquiring other practices, and then a series of agreements that were price setting , uh, agreements , um, with independent practices. The other interesting thing is , um, or fact here is, you know, Welsh Carson owns , um, less than a quarter, 25% of, of US anesthesiology partners today. Uh , but the FTC sued the investor alleging that , uh, it played an instrumental role in developing , uh, the, the acquisition strategy, particularly with respect to m and a in Texas. So that's what we know, and we will see how this one , uh, develops. Uh, turn it back to you, Carol.
Speaker 2:All right , thank you, John . So we are down to the last three. Now, drum rows . Um, I know Alexis made the argument earlier on that one of , uh, his case should be on the top three list, but of course, 2023 is a year where we see a lot of updates on policy statements, withdrawal of policy statements, rulemaking, and new guidelines. So unsurprisingly, our top three are all topics related to new guidelines, statements, and rules. Uh, number three, Alexis.
Speaker 3:Yeah. Number three, we have the DOJ and MTCs withdrawal of , uh, a couple healthcare enforcement statements. So last year, the DOJ and later in the year, the FTC repealed , uh, pretty longstanding antitrust guidance documents that had been out there for the healthcare industry. Specifically, the agencies repealed the joint statements of antitrust enforcement policy in healthcare that had been out there since 96. And the statements of antitrust enforcement policy regarding ACOs participating in the Medicare Shared Savings Program, which had been out since 2011. Um, I'll focus on the 96 healthcare statements, which covered a , a variety of topics, but those included how the agencies approach analyzing joint purchasing arrangements among healthcare providers , uh, physician network joint ventures. They provided a safety zone for certain small hospital acquisitions and provided , uh, safety zones for certain price and non-price information exchanges among competitors. And the statements provided around those information exchanges seem to be one of the reasons , uh, for the repeal. Those, those statements had actually been used by antitrust practitioners , um, to provide information exchange guidance to clients across industries, not just healthcare. Um, but the agency said that in, in the repeal that , uh, these guidance documents were out of date , um, didn't reflect changes that had occurred in the healthcare industry, no longer reflected those modern healthcare markets were overly permissive. Um, and that other guidance and , and case law su suffice to provide guidance. So as of now, there's no indication that these guidance documents will be replaced with anything new. So that leaves a hole in agency guidance. But, you know, practitioners can still refer to the existing case law and other policy statements, and I think , um, you know, John and Carol can weigh if they sharply disagree, but I think there are still principles in those repeal documents that provide some grounding for advice that practitioners can still give clients. Even though there's no official safety zone, you can't rely on it. But I, I do think some of those principles are still , um, valid. You just don't get a , a free pass in , in a safety zone.
Speaker 4:I, I agree. I mean, I , I, I think it's a really big deal. I mean, I guess we're, we're down to the top few ones here, so that they're all big deals, but , um, I think it's a really significant development that they were withdrawn, not withstanding the fact that they're as old as VHS or whatever the DOJ press statement said about them. Um, and importantly, Alexis, I agree with you specifically on the fact that there's still guidance in the form of , um, at the ftc, you know, advisory opinion letters and at the DOJ business review letters, that layout , you know, with a lot of detail instances where, for example, providers were considered to be clinically integrated under federal antitrust laws and, and evaluated pursuant to the rule of reason. So there is still is guidance, it's just not , uh, in the form of those other things and , and of course, enforcement actions. So there's some law and some guidance for practitioners, but it was still significant that they were withdrawn.
Speaker 5:Read .
Speaker 2:Okay, number two, John.
Speaker 4:Sure. So I don't wanna, I don't wanna steal Alexis's thunder on the number one, but we've got merger related <laugh> developments that if anybody's been paying attention to, you know, m and a antitrust over the last year, you know, these , uh, I'm gonna go first with number two, which in a busy summer , uh, I feel like everything I'm saying, other than maybe the, the one that happened in the fall, you know, a lot of action in, in June and July, and this was no different, which is in, in June of 2023 , um, the Federal Trade Commission, FTC and DOJ jointly announced that there would be new , um, regulations and rules governing the Harts Scott Rodino Act filing process and, and what's required. So very high level here , um, HSR is , uh, you know, the amendment, the HSR amendments to the Clayton Act back in the mid seventies, provide a system or a framework whereby parties provide certain information , uh, to the government , uh, about transactions that meet certain requirements, including the size of the deal and the size of the parties. And then they , uh, you know, can't close for 30 calendar days until the waiting period expires, and that waiting period can be extended. Those filings have called for , uh, you know, a fair amount of information , um, with some revisions. You know, notably, a while back, I think it was 2011 or 2012, they were updated to include more, particularly , um, with respect to what they call associates or, or certain types of entities involved in private equity. And in the summer , um, new rules were proposed that vastly, vastly , uh, extend or expand, rather, the information that will be required , uh, to put together an HSR filing. And we will see in , in this year when those rules are finalized. But for example , um, you know, draft all drafts of deal documents , uh, all sorts of information about, you know, investors , uh, are , uh, uh, affirmative really statements or characterizations about market shares and competition related issues that , uh, you know, you have to provide upfront, so to speak, in a , you know, a European merger control regime, but that you have not, historically, you've not had to do rather in, in the US or the federal level at least. And so, thi this is this, these rules that finalized , um, would be , uh, a , a big deal , uh, no pun intended , uh, in, in merger land . Uh, I think by the FTCs own estimate and the , and the comment, FTC and DO js , excuse me , uh, own estimates in , in the public comment notice , um, that they , uh, uh, uh, figured out or , or , or predicted that it would take, I think four times the amount of, of time, and therefore four times the amount of expense , um, in terms of a council spend to put these forms together if the rules were finalized. And so , uh, these are, you know , uh, uh, I keep saying it, but these are a really significant expansion, significant departure, however you wanna characterize it from what's been a , a pretty consistent, despite some changes and updates, consistent framework in terms of the types of information that's required for merging parties , um, in the United States at the federal level. So that is number two. Carol, happy to turn it back to you.
Speaker 2:Right , thank you, John. And certainly echo that the proposed rules do seem like a major change from what's been longstanding in the HSR filings , uh, rules. And that would take the parties a lot more effort to put the, put the filings together. All right . Last but not least , um, if you've heard R number 10 to number two, then I think it's not gonna be surprised , uh, surprising what our number one is, because there's one very major development that we haven't discussed, Alexis.
Speaker 3:Yeah. So , uh, this is the, the new merger guidelines , uh, applies to all industries, obviously, but will have us a , certainly a big impact in healthcare. Uh, it's our biggest development. These new guidelines came out in mid-December of 23. Um, they were roughly two years in the making. And , um, I think one way of described it's is it's really kind of the culmination of where the Biden antitrust , uh, agencies, the administration has wanted to take antitrust enforcement in their effort to ramp up antitrust merger enforcement in particular. Um, you know, again, we could probably spend , uh, at least an hour on this topic, and surely there'll be , uh, presentations galore , uh, for the weeks and months to come on this. But I , you know, here are, I think a few of the kind of key aspects of the guidelines for me. One of the most notable is that there is now a presumption of harm written into the guidelines when a horizontal merger involves two parties with a combined market share over 30%, and there's a modest increase in concentration, as well as a new lower market concentration threshold for presuming that a horizontal merger will harm competition. That reverts back to thresholds for concentration that existed before the 2010 guidelines that had proceeded these last new merger guidelines that just came out in December. Um, I think another aspect is that the guidelines clearly reflect the agency's , uh, increased concern about vertical mergers and their interest in stemming , um, vertical , uh, combinations. Um, they kind of walked back a little bit of a formal 50% market share threshold for presuming a vertical merger was unlawful, but they still have that 50% share number in a footnote saying that reflects, or they will infer monopoly power from that level of share as part of their framework for analyzing vertical mergers. Um, you know , there's a lot in there. There's greater scrutiny of transactions that may eliminate potential. Oration com competition reflects the agency's concern about serial acquisitions and roll-ups. Um, that obviously has implications for PE acquisitions and healthcare. Um, there were a couple things that were softened and removed between the draft guidelines and the final that came out. And a few things that were clarified , um, including that a lot of these presumptions are , I think, just about all these presumptions are rebuttable. But I think it's still fair to say that these guidelines are intended to widen the net on the types of transactions that may raise concerns and lower the bar for the agencies to find a deal problematic, and at the same time, make the party's efforts to defend a transaction based on efficiencies or other grounds even harder. So , um, we'll see how this plays out that the guidelines aren't binding on the courts. Um, but prior versions, including the most recent version of the horizontal merger guidelines were often referenced in cases and favorably. So, so we'll have to see if courts , uh, accept these new guidelines or push back on them. And of course , um, you know, we'll have to see what happens with the election and if there is a change in the administration, what what happens to these guidelines after that. So a lot to be on the watch for Carol. Carol .
Speaker 2:Thank you, Alexis. And that is it for our top 10 list of healthcare developments in 2023. Now, switching gears a little bit, we're going to take you through the top 10 developments to watch four in 2024. Uh, what's our number 10, Alexis?
Speaker 3:Yeah. So I'm gonna pick up on something John , uh, mentioned in our 23, which is the USAP case, the FTC filed. So I'm, I'm gonna be walking to see if we're going to get a decision on the motion to dismiss the FTCs suit and where things go from there. As , as John mentioned, this case hits on a lot of key issues, hot button issues for the FTC, healthcare private equity roll-ups. You know, there's a bit of a novel claim in there about , um, USAP , uh, where there's a market where SP acquired, you know, single provider group and didn't otherwise consolidate in provider groups in one of those markets. Seems to be some sort of a high , kind of high cross market theory without calling it that, or maybe some sort of monopoly leveraging theory. Anyway, I think it's gonna be interesting to see how that case gets litigated and what happens with that motion. So I'll be watching out for that.
Speaker 2:All right , number nine, John .
Speaker 4:Number nine, just picking up on the orange book. Um, number 10, development in 2023. There was a policy statement and , and some notices, notice letters the FTC had sent out to pharma companies , um, about patent listing dispute notifications. And so now, you know, let's see what happens in terms of potential challenges in litigation , uh, in the orange book , uh, space and, and the FTCs action here. We'll be interesting to see what unfolds over the course of 2024 here.
Speaker 2:Thank you, John. Number eight, Alexis.
Speaker 3:Yeah, we didn't , um, mention it in 23 developments, but , um, be keeping, we'll all be, I think, keeping an eye up for what's happening in the DOJ . No poach and wage fixing. Obviously, the agencies are taking an increased interest in labor market issues. The DOJ has been , um, bringing cases, criminal cases , uh, in the no poach ways , fixing context. Um, they've suffered a series of losses in those cases, though a lot of those have occurred in the healthcare space, and they've been losing those cases in front of juries. Um, they have survived motions to dismiss , uh, from judges who, who have upheld the theory that the DOJ is bringing, that those can be antitrust violations. Um, but the juries that have been hearing those cases have brought back acquittals. Um, and there , there was one where the DOJ did secure , uh, you know, plea deals in connection with Nevada school. No n uh , nurse, no poach a wage fixing case, but otherwise, the DO j's been losing those cases. Um, the DOJ currently has another case in Nevada where it's alleging that a home health staffing company executive conspired to fix , uh, nurses' wages. So they continue to be interested in bringing these cases , um, despite the challenges and setbacks they've had so far. So , uh, we'll be watching out whether to see whether they have , uh, any different outcome in , in the cases they have ongoing, in any new ones they might bring in the coming year.
Speaker 2:Great. Thank you, Alexis. And 2024 is an election year. So John, do you wanna take us through our number seven?
Speaker 4:Sure. Uh, as, as I'm sure we all know, it's , um, although it's exhausting to think about frankly, sitting here in DC uh, 2024 presidential election , um, in, in coming up this year , uh, so we will see what happens. Uh, I don't think anyone really knows. I do think , um, however, we think that this is relevant to , uh, antitrust enforcement and healthcare antitrust enforcement, given what I think is correctly, generally speaking, perceived to be quite a shift in enforcement and in action from the agencies under this administration. And so, while it's not like , uh, if there were to be a new president that, you know, things would change even in 2024, that that president would not be inaugurated until 2025, the election itself, and, and what that means for the broader antitrust enforcement movement, particularly what they call neo brandeen , uh, progressives with respect to antitrust , uh, certainly matters. And so, while it's not in our top five for 24 from an antitrust perspective , um, maybe more than, maybe more than ever , um, the election elections are, are, are really mattering , um, in terms of what, what happens again at the federal level. Uh, back to you, Carol.
Speaker 2:Thank you, John. Uh , number six, Alexis.
Speaker 3:Yeah. Another case to keep an eye on in 24 is a state case in Connecticut , uh, brown versus Hartford Healthcare. It's a private class action brought by commercially insured patients, and it alleges that Hartford Healthcare has forced payers to include all or nothing and in a steering terms in their contracts. Um, there they argue that Hartford Healthcare uses its market power over inpatient services in certain parts of Connecticut to enhance its control over outpatient services and charge higher prices. They also allege that Hartford uses its market power in those areas and , uh, in all or nothing contracting terms to force payers to include other Hartford healthcare facilities and other parts of Connecticut to be included in networks. So they allege that those anti steering and tier terms prevent payers from incentivizing patients to lose , uh, use less expensive providers. Um, the court denied a motion to dismiss on standing grounds and , uh, other defenses. Um, so that case continues. It'll be interesting to watch that it's the latest in a series of cases challenging these . So-called all or nothing or anti anti steering and tier terms that have been , uh, seen in prior cases. Uh, the DOJ in North Carolina, ag G settled with Atrium over over those types of terms. And there's that long running Sutter case we've co covered in this podcast before, where the state , uh, ag got a settlement with Sutter, but then Sutter won a federal case , uh, that's currently on appeal, so some mixed , um, results in these cases. So it'll be interesting to see where this case comes out and , and what it might add to the evolving antitrust treatment of these , uh, types of terms and payer provider contracts.
Speaker 2:All right , thank you. Number five, John.
Speaker 4:All right , we're in the top five home stretch . Um, I , number five is , uh, in terms of the top developments to watch out for in 2024 , uh, are enforcement actions by either agency in , uh, in the healthcare space in areas that , uh, had been previously covered by the healthcare statements and other guidance that had been withdrawn as Alexis discussed a few minutes ago. So , um, a lot of stuff was withdrawn <laugh>. So it's possible we could see enforcement actions perhaps related to information sharing, perhaps related to , uh, clinical integration , uh, or clinically integrated networks , um, alleging they're not clinically integrated , uh, or financial integration or rural hospitals or anything else that was covered by the statements. And so, you know, we've seen this pattern where , um, you know, the FTC has , uh, in particular put out a policy statement and then that was followed pretty swiftly by enforcement actions. And so we will see if that's the case with respect to the withdrawal of the statements and other guidance in 2024. Uh, back to you, Carol.
Speaker 2:Thanks, John. Number four. Alexis.
Speaker 3:Yeah, so I, I don't think , uh, any interested lawyers have forgotten, but , um, there's, as a reminder, there are still two open seats at the FTC for Republicans to fill. Um, there are two nominees out there. They've had nomination hearings and advanced senate committee that's , uh, the Virginia , uh, solicitor General Andrew Ferguson, and the Utah Solicitor General Melissa Holyoke. Um, they had appeared to be getting some movement and be set for confirmation, but , um, just recently, Senator Holly has said he wants more time to review , um, Mr. Ferguson's , um, uh, Ken see in part, as well as another nominee apparently, because they both have , uh, well, a nominee, I should say, to a different agency, the N-T-E-S-B . Um, because those two , uh, candidates have , or nominees have ties to Senate majority leader Mitch McConnell. And right now, apparently , uh, Senator Holly and McConnell are feuding over a variety of issues. So , um, political infighting is holding up these two seats being filled at the FTC. So , uh, we'll be watching out if and when they're confirmed what happens at the commission. Their , their votes obviously aren't sufficient to alone change any votes coming out of the FTC, but they can certainly issue , um, dissents and, and make statements , um, that , uh, could be relevant to considering various issues and, and where the commission comes out. So it'll be interesting to see , um, how and when those folks get , uh, uh, seated at the commission.
Speaker 2:Okay, thank you, Alexis. We're down to our top three now. And just as our top three list for 2023 , um, again, our top three list for 2024 concerns, RULEMAKINGS guidelines and such. So what's our number three, John ?
Speaker 4:That's right, we got a theme here. Um, FTC and rulemaking, <laugh> and , uh, and DOJ to some extent with respect to guidance. So number three is the non-compete , uh, rule. Uh, FTC, I guess it , boy, it's been over a year , uh, January 5th of last year , uh, proposed a, a rule pursuant to its rulemaking authority and , and section five of the FTC Act somewhat controversially banning , um, employee employer non-competes , um, series of public comment periods, series of workshops. And we're waiting for the final rule. We will see if it's as broad , um, as initially proposed, and that will be interesting. Perhaps it will be scaled back, perhaps it won't. And then we will also see whether , uh, what we think are likely challenges from a number of different groups, including , um, chamber of Commerce, whether those will , um, be successful in attempting to invalidate the , uh, proposed rule under administrative constitutional or other statutory regulatory grounds. So I think we're anxiously awaiting to see what the rule is and then what happens , um, with whether the rule is ultimately , uh, upheld by a court.
Speaker 2:Thank you, John. Number two on our list. John , uh, just previewed for us the HSR rules, and Alexis is going to take us through what to , um, what out for in 2024.
Speaker 3:Yeah, I mean, I think this is one , um, to, to be certainly on a lookout for John . Kinda explained how , uh, broad and potentially really burdensome these , uh, HSR would be if they're implemented as proposed. So we'll be watching out to see if a final rule comes out , um, looking like the draft, or if they are significantly more revised in any way. Is there any sort of short firm version for simple non-controversial deals, or do they stick close to the draft? And then if the final rules do come out, will they actually go into a factor ? Will they be held up through LI litigation? So , um, a lot to look out for. If they do go into effect. Obviously a lot of , uh, time and energy could be , um, expended , uh, preparing HSR filings. Um, and, and parties will have to start earlier preparing those in order to try to stick to their deal timing. Uh, unfortunately, some of that burden's gonna fall disproportionately on, on small, smaller companies who , who don't have the , the resources that maybe larger companies do. So , uh, lots to watch out for what those final HSR rules look like.
Speaker 2:Thank you, Alexis. We're down to our last one. And John has the honor to present the number one, the most , um, interesting development that we should watch out for in 2024. What is it, John?
Speaker 4:Merger guidelines. Merger guidelines, merger guidelines, that's number one. Um, I think most would agree with that with respect to antitrust and healthcare antitrust, given the amount of scrutiny , uh, and enforcement actions in the healthcare space, which we've been talking about for now six years. Uh, the , we have new guidelines, elastic Alexis , explain those in , in , in the most significant parts of those with respect to market shares. Um, we will see , uh, if those guidelines as they are not currently technically law, they're , you know, they're not statute, they're, they , they seek to rather , um, provide guidance from the agencies on how they enforce Section seven of the Clayton Act. You know, whether a transaction would substantially lessen competition , um, or, or tend to create a monopoly. And, you know, these guidelines are, are ultimately going to need to be , um, litigated. I think , um, we would agree on that to , to the extent parties have the appetite for merger litigation, which, which is a big deal. And so we will see, you know, what happens with them and, and whether they're challenged and how they're challenged and the like. Um, and then we'll also see, you know, on more of a kind of day-to-day basis for, for me, for Alexis , for other practitioners , um, what it means at the enforcement investigation level , um, at both agencies. And we're in nascent stages here with respect to the new merger guidelines. And , uh, even though we have some stuff we've talked about here, some deals , um, uh, that, that, that arguably are, are, are part of those, but will , are , are , are influenced by those. Um , but there's a lot , uh, that remains to be seen in terms of the new merger guidelines and their implementation. So with that and having had the honor of having number number one for 2024, Carol, happy to turn it back over to you.
Speaker 2:Great, thank you John . And Alexis, I think we will see is a great way to end this podcast. Uh, and one thing I forgot to mention, the beginning of this podcast is our obligatory disclaimer. Uh, the views we express here are views of our own and are not those of our clients , um, or of our firm's clients. Um, with that, thank you John and Alexis for taking us through the top 10 lists for 2023 and 2024. And I wanna thank our listeners , uh, for listening in.
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