On July 9, 2024, the Federal Trade Commission (FTC) Office of Policy Planning released an Interim Staff Report titled Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies. The Interim Staff Report reflects the FTC’s work since it began its 6(b) study of PBMs in June 2022.  Mintz’s Health and Antitrust teams actively monitor federal and state regulatory and legislative developments in the PBM space, including those from the FTC. In this Special Edition of the PBM Policy and Legislative Update, the Mintz Health team partnered with our Antitrust colleagues to analyze the Interim Staff Report including Commissioner Melissa Holyoak’s dissenting statement.  We also highlight upcoming Congressional testimony by CEOs of the three largest PBMs, as well as media reports of a forthcoming FTC action related to PBM insulin rebate practices.

Last week, a federal judge in North Carolina declined to preliminarily enjoin Novant Health, Inc.’s (“Novant”) acquisition of two hospitals from Community Health Systems, Inc. (“CHS”). The FTC filed suit in federal court and in its in-house administrative court in January, alleging that the transaction violated Section 7 of the Clayton Act in the market for inpatient general acute care services sold to commercial health plans and their members.  

Over ten years ago, individuals and businesses insured by health plans that contract with Sutter Health filed a class action lawsuit against Sutter Health alleging antitrust violations under federal and California laws. Sutter is a healthcare giant in Northern California, serving over 100 communities and 3 million people, and includes 24 hospitals, five medical foundations, and 40 ambulatory service centers.

Read about the FTC’s March 5, 2024 workshop on private equity (PE) investments in the health care industry and a joint request for information on the effects of PE transactions in the health care industry issued by the FTC, DOJ, and HHS.

Since the beginning of Chair Khan’s tenure at the Federal Trade Commission (and in line with President Biden’s aim to curb rising health care costs), the current FTC has committed to bring enforcement actions against health care consolidation and rising prices. Over the past two years the FTC has employed novel competition tools to achieve this purpose, as demonstrated by the Commission’s suit last week against a private equity firm and its related specialty practice—alleging violations of Sections 1 and 2 of the Sherman Act, Section 7 of the Clayton Act and Section 5 of the FTC Act.

Nearly a year after announcing the expansion of its Section 5 “standalone authority” (https://www.mintz.com/insights-center/viewpoints/2022-11-14-dose-steroids-chair-khans-ftc-releases-expansive-policy), which encompasses conduct outside the scope of the foundational federal antitrust laws, the FTC voted unanimously to issue a policy statement explaining how its authority applies to the listing of brand-name drug patents in the Food and Drug Administration’s (FDA) Orange Book.

The FTC and DOJ jointly published draft merger guidelines reflecting the agencies’ current aggressive approach to merger enforcement. In an article, Mintz Antitrust attorneys discuss the draft guidelines’ move away from the consumer welfare standard, lower thresholds for deals presumed to be illegal, and other key changes, including a focus on the effect of industry roll-ups.