DOJ withdraws three “outdated” healthcare antitrust policies – implications could be much broader

The DOJ announcement

On February 3, 2023, the Antitrust Division of the Department of Justice (DOJ) announced “the withdrawal of three outdated antitrust policy statements related to enforcement in healthcare markets.”[1]  Those three policy statements, issued in 1993, 1996, and 2011, were each jointly issued by the DOJ and the Federal Trade Commission (“FTC”) and address various topics in antitrust enforcement, as detailed below.  The Federal Trade Commission did not withdraw the guidelines, but it would not be surprising to see a parallel announcement from the FTC in the near future. 

The 1993 and 1996 statements described how the agencies would approach nine categories of conduct and established “antitrust safety zones” upon which private parties have relied over the past three decades, not just in the healthcare space, but also across a wide range of other industries.  The 2011 policy statements addressed a tenth category:  the formation and operation of “Accountable Care Organizations” under the Affordable Care Act.

The healthcare policy statements

• The 1993 policy statements were “designed to provide information to the health care community in a time of tremendous change, and to resolve … any antitrust uncertainty that might deter beneficial mergers or joint ventures that promise to reduce health care costs.”  Accordingly, the 1993 policy statements set forth “antitrust safety zones” to “describe the circumstances under which the Agencies will not challenge conduct under the antitrust laws.”[2]
• The 1996 policy statements restated the existing safety zones and expanded on prior guidance in order to “amplify the enforcement policy statement on” two subjects:  physician network joint ventures and multiprovider networks.[3]  In particular, the DOJ and the FTC provided guidance for the following categories, often with illustrative examples.  For most categories, the agencies committed not to challenge such conduct if it fell within a specified antitrust safety zone.[4]  These included:  hospital mergers[5]; hospital joint ventures involving high-technology or other expensive medical equipment[6]; providers’ collective provision of fee[7] and non-fee-related[8] information to purchasers of health care services; hospital participation in exchanges of price and cost information[9]; joint purchase arrangements among health care providers[10]; and physician network joint ventures.[11]  The agencies declined to identify antitrust safety zones for two categories of conduct:  hospital joint ventures involving specialized clinical or other expensive health care services; and multiprovider networks.[12]
• The 2011 policy statements addressed “Accountable Care Organizations” (“ACOs”), which are arrangements promoted by the Affordable Care Act as a way for health care providers “to manage and coordinate care for Medicare fee-for-service beneficiaries.”[13]  In order “to maximize and foster opportunities for ACO innovation and better health for patients,” the 2011 policy statements provided general guidance “to clarify” how the agencies will analyze ACOs under the antitrust laws and established an antitrust safety zone subject to certain conditions and exceptions.[14]

The DOJ’s withdrawal

The DOJ’s announcement described the 1993, 1996, and 2011 policy statements as “outdated.”  In particular, the agency noted that “[o]ver the past three decades since this guidance was first released, the healthcare landscape has changed significantly.”  “As a result,” the DOJ concluded, the policy statements had become “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.”[15] 

The FTC did not join the DOJ announcement, although a parallel statement would not be surprising.[16]  This is important because the FTC and the DOJ share healthcare enforcement efforts.  The DOJ oversees healthcare enforcement for criminal matters, insurance, Medicare Part D, non-profits, and other areas.  The FTC has traditionally broad healthcare enforcement jurisdiction, covering, among other things, drugs (including small molecules and biologics), medical devices, hospitals, provider groups, PBMs, and GPOs.  For now, the guidelines continue to apply to FTC enforcement efforts.  

The DOJ also did not announce plans to issue new healthcare policy statements.  Instead, the DOJ stated that “[r]ecent 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.”[17]

The DOJ’s announcement has implications in healthcare and well beyond

The DOJ’s announcement would be notable even if its effects were limited to the healthcare industry.  They are not so limited, however.  The three policy statements withdrawn by the DOJ have all been in force for over a decade, and in two cases for nearly thirty years. 

The statements were designed generally – and in at least one case explicitly – to “resolve … any antitrust uncertainty that might deter beneficial mergers or joint ventures that promise to reduce health care costs.”[18]  The withdrawal of the policy statements thus re-introduces uncertainty with respect to how the agencies will approach antitrust enforcement within the healthcare industry.

The DOJ’s announcement, however, affects industries well beyond healthcare.  Indeed, the 1996 policy statements were, by their own terms, a description of how the DOJ and FTC “analyze[d] all types of health care provider networks under general antitrust principles.”[19]  In issuing those statements, the agencies explicitly “emphasize[d] that it is not their intent to treat such networks either more strictly or more leniently than joint ventures in other industries.”[20]  Consistent with that characterization, for many years the safe harbors created by the policy statements have, as a practical matter, been applied (or often, even consistently, assumed to apply) to industries beyond healthcare.  DOJ Business Review Letters apply the healthcare safety zones outside the healthcare industry.[21]  Similarly, the ABA’s main antitrust treatise – Antitrust Law Developments – and another well-regarded treatise by Professors Areeda and Hovenkamp both suggest general application of the healthcare safe harbors.[22]  

Following the withdrawal of these guidelines, few DOJ safe harbors for the analysis of information sharing, benchmarking, and joint purchasing agreements remain.  The agencies’ Competitor Collaboration Guidelines state that the government will not ordinarily challenge a legitimate collaboration between or among competitors where the combined share of the relevant market is less than 20%.[23]  The agencies’ Antitrust Guidelines for the Licensing of Intellectual Property also state that the agencies ordinarily will not challenge a licensing arrangement if (i) the restraint is not facially anticompetitive, and (ii) the licensor’s and licensees’ combined share of the relevant market is less than 20%.[24]  The recent announcement from the DOJ may call into question the extent to which entities can and should continue to rely upon these guidelines.

Until the DOJ articulates new standards (either through guidelines or enforcement actions), businesses in healthcare and many other industries might well continue to conform their benchmarking, information exchange, or joint purchasing activities to the standards set forth in the withdrawn policy statements, particularly if they also face FTC scrutiny.  Doing so creates the risk, however, that proceeding without clear standards could result in unforeseen risks. 

Key takeaways

The DOJ withdrew policy statements that were designed to “resolve … antitrust uncertainty” in the healthcare industry and describe how the agencies apply “general antitrust principles.”[25]  The policy statements remain in effect for the FTC.  At least for now, the DOJ has indicated any new standards will be expressed not in new policy statements, but by the DOJ’s enforcement actions and competition advocacy.  This announcement creates uncertainty for businesses – in the healthcare sector and well beyond – that face the potential for DOJ and FTC enforcement actions.  We expect that parties may continue generally to follow the standards articulated in the withdrawn guidelines, albeit at higher and potentially unquantifiable risk.  We will continue to monitor these developments closely.