DOJ Strikes 'Outdated' Policies That Tamp Healthcare Competition

Justice officials note that the withdrawn guidance hasn't kept pace with the rapidly changing healthcare landscape.

The U.S. Justice Department has withdrawn three, decades-old antitrust policy statements affecting healthcare markets, calling the guidance "outdated" and their removal "long overdue."

"The healthcare industry has changed a lot since 1993, and the withdrawal of that era's out of date guidance is long overdue," Assistant AG Jonathan Kanter of DOJ's Antitrust Division says in a media release. "The Antitrust Division will continue to work to ensure that its enforcement efforts reflect modern market realities."

DOJ says the "withdrawal of the three statements is the best course of action for promoting competition and transparency."

"Over the past three decades since this guidance was first released, the healthcare landscape has changed significantly," DOJ says. "As a result, 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."

"Recent enforcement actions and competition advocacy in healthcare provide guidance to the public, and a case-by-case enforcement approach will allow the Division to better evaluate mergers and conduct in healthcare markets that may harm competition."

The three withdrawn policy statements are: Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area (Sept. 15, 1993); Statements of Antitrust Enforcement Policy in Health Care (Aug. 1, 1996); and Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (Oct. 20, 2011).

Guidance documents are non-binding and do not create legal rights or obligations.

What This Means

HealthLeaders swapped emails with Zachary M. Johns, an antitrust law expert and partner at Morgan Lewis, and asked him for a quick breakdown what transpired at DOJ.

HL: Why were the policies withdrawn?

Johns: This development is not entirely unexpected as it follows the trendline of the antitrust agencies' statements in other contexts that they will be more critical of health care transaction and information exchanges going forward. 

A DOJ representative publicly commented that the DOJ's understanding of healthcare economics has evolved and that healthcare, as a data-intensive industry, relies on machine learning, artificial intelligence, and other advanced tools to deliver products or services. Given these changes, almost all of which are technology drive, the DOJ felt that the statements no longer reflected market realities. 

HL: How will the withdrawal of these policies affect healthcare M&A?

Johns: While the withdrawal of the guidance does not change the law, it does signal an increased interest in enforcement in this area, which is unsurprising given DOJ's public statements over the past year. This move may also create some uncertainty for provider networks more generally as the policy statements addressed how those networks could minimize antitrust risk. 

It is unclear how much of a risk this actually is, though, as the FTC and DOJ have not (yet) withdrawn their respective guidance on clinical integration and financial risk sharing that is embodied in their advisory opinions and business review letters (in addition to the now-withdrawn policy statements). 

HL: Are further policies likely to be amended or withdrawn?

Johns: It is yet to be determined if the agencies take further steps to withdraw past guidance over the coming weeks.  If they do, it could signal a more significant change in enforcement on those issues.

HL: Anything else?

Johns: The DOJ seems primarily focused on the impact that advanced technologies, such as AI and algorithmic pricing, are having across health care and other industries to which the guidance has more broadly been applied.  It is also clear that the DOJ thinks the safe harbors for benchmarking activities are no longer adequate to guard against potential anticompetitive harms.