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AHLA's Speaking of Health Law
2024's Biggest Health Care Antitrust Developments and What to Expect in 2025
In the seventh installment of their popular annual series, John D. Carroll, Partner, Sheppard Mullin Richter & Hampton LLP, and Alexis J. Gilman, Partner, Crowell and Moring LLP, discuss 2024's biggest antitrust developments and what attorneys should expect in 2025.
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Speaker 3:Welcome everybody. Uh, this is our annual update on the top 10 healthcare antitrust developments in 2024, and a preview of what to lookout for is the top developments next year. Um , Alexis Gilman. I'm a partner in the Antitrust Group at Crowell and Moring in Washington DC and my practice covers a variety of antitrust issues with a particular focus on representing parties and third parties in F-T-C-D-O-J and state aging murder investigations in the healthcare space. And with me is John Carroll, as always. Uh, John, good to see you. Happy New Year. You wanna introduce yourself?
Speaker 4:Absolutely. Uh, good to see you, Alexis, and, and happy New year to you and, you know, excited to be doing this for, I think we've lost count now, 6, 7, 8 <laugh>, something like that, years in a row. Um, you know , uh, like Alexis, I'm an antitrust lawyer. I'm a partner , uh, in the Washington DC office of Sheppard Mullin. I focus on , uh, investigations as well in the antitrust space, and, and particularly , um, in the healthcare industries as well, some other industries , uh, in the , in here, in the US and internationally. Um, and with that, there is a ton to cover. Uh, those of you familiar with our, I think, quite popular , uh, HLA podcast that we do on an annual basis may be familiar with the format, which is counting down first , uh, the top 10 healthcare antitrust developments of the previous year, and then counting down the top 10 healthcare antitrust developments. We are looking forward to in 2025, what we'll be keeping our eye on, and we are going to be covering , um, not just healthcare , uh, US healthcare antitrust developments with respect to providers and payers, but also with respect to life sciences, so pharma , med device, et cetera. So there's a lot to cover, and we're gonna try to keep this quick , uh, or at least crisp , uh, while also hopefully delivering the content that folks have been accustomed to getting. So, with that, I have the pleasure of starting us off. Um, in 2024, we're gonna be counting down 10 to one. Number 10, I think is consistent with a broader theme, not to steal any thunder from , uh, my friend Alexis. But , uh, the theme you'll be seeing here is the states, the states, the states <laugh> , uh, more and more action , uh, antitrust action in healthcare from the states. Uh, and, and number 10 starts to soften that vein. And so number 10 is the implementation of the Office of Healthcare Affordability or oca , uh, as those of us who practice in this space, call it in the great state of California. So briefly , uh, California took some time to consider a new regulatory regime to require notice and review of material healthcare transactions. Um , that process was finalized as of April 1st. Uh, it's a complicated piece of law statute in the final regs. There's a lot of detail here, but the bottom line is that material change transactions , uh, must be reviewed by , uh, the authorities in California and could be ref before closing and could even be referred to the California , uh, attorney general DOJ , under an antitrust like review regime. Um, there's a lot to cover here. We could talk the whole hour about it, but I think the headlines are, it applies to payers, providers, other healthcare entities, and the thresholds, meaning the monetary amounts that require filing are a fraction of those required , uh, at the federal level under HSR. So, a transaction value of just 25 million in the provision of healthcare services , um, could , uh, technically require a filing an oka filing in California. So this has been in place since April. Um, I've certainly had some fun experiences with this , uh, Alexis May have as well. And look, California's the, the sixth largest economy, if it were its own country in the world, certainly one of the largest healthcare markets in the world. And so this has had already just , um, in a few months since April of 2024 , uh, a pretty serious impact on the industry. Alexis,
Speaker 3:Thanks John . Uh, number nine. We have a big , uh, settlement in the healthcare space involving payers and providers. And this just happened a couple weeks ago, or broke a couple weeks ago , uh, in December, where a district court judge in Alabama gave initial green light to a proposed settlement in the very long running, I think it's over 12 years , uh, class action suit , uh, brought by healthcare providers against the Blue Cross Blue Shield Association and member plans. Um, the judge's own order suggests that this might be the largest ever , uh, settlement recovery in an class action case that didn't follow on from a government investigation. Uh, we, we obviously don't have time to cover the, the full scope of the allegations and claims, but in a nutshell , uh, the plaintiffs had claimed that the association's policies and trademark licensing agreements , um, had divided geographic markets into exclusive territories, and as a result, inhibited competition between member health plans. Uh, but so this settlement is , uh, involves a 2.8 billion with a b uh , dollar payment , uh, to the class. Uh, includes several other elements that involve certain policy and structural changes to the association , uh, that includes changes to the Blue Carb program infrastructure , uh, that, as I understand, include developing a system-wide cloud-based architecture to help providers access member benefits and eligibility verification , uh, pre-authorization requests, claims status tracking, and things of that nature. Uh, there's certain requirements for Blue Card , uh, pay commitments that , uh, plans have to pay certain fully insured claims within 30 days, provide certain additional information about claims so that they can be paid promptly and imposes penalties if they're not paid promptly. Um, has other changes , uh, regarding the contracts between providers and, and blues plans that, among other things, will apparently allow certain hospitals to contract with more blues plans . So a lot built into the settlement that we've just scratched the surface of. Um, you know, it goes without saying that plaintiff's , uh, lawyers did pretty well for themselves in this , uh, class counsel apparently will receive up to 25% of the settlement funds . So that's a , a cool $700 million in , in fees. Um, and, and last thing I'll say on this one is it follows a fairly similar , uh, size settlement , uh, among the association and and network subscribers. So , um, we may be reaching an end , uh, to the, to the largest parts of these , uh, class action cases. So that's our number nine development, and I'll turn it over to John from number eight.
Speaker 4:Thanks so much, Alexis. So number eight, state plus federal, which is the FTCs opposition to the Union Health Terre Haute , uh, Terre Haute Regional , uh, certificate of Public Advantage. Um , so back in September, just a few months ago, the FTC uh, submitted a comment that urged the Indiana Department of Health to deny an application , um, that would seek to combine Union Hospital , uh, which is Union Health and tr , uh, THRH teter , uh, regional Hospital. Uh, just as background here as our , our listeners may know , um, certain states, I think it's 18 plus Indiana, which is the relevant state here, have what are called copa , um, regulations or statutes, certificate of Public Advantage, whereby , um, the state can approve combinations among other things approved combinations between or among healthcare providers like hospitals. And if these , um, uh, uh, transactions are done pursuant to these regimes, these COPA regimes , um, in some instances, they can shield the deal from federal anti scrutiny. So , uh, long story short , um, parties sought to affiliate and , uh, we're doing this pursuant to a copa uh , Indiana copa , um, regime. Uh, FTC submitted a public comment , um, alleging a number of things , um, in terms of the transactions worsening healthcare outcome for Indiana patients, lower wage for workers , uh, and that the , uh, overall in a certain county in Indiana that , um, the, the combined entity would have a market share of , of nearly se I'm quoting here , uh, from the FTC comment, nearly four 74% of all commercially insured hospital services. So , um, that application was filed. FTC submitted , um, the response right after , uh, it was filed. And then , um, the FTC opposition actually , uh, ended up , uh, resulting in the transaction being scuttled just in November. So, again, combination of state and federal , uh, action here in healthcare antitrust. And that was our number eight. Uh, turning it back to Alexis four , number seven,
Speaker 3:Yeah, number seven , uh, is a mix of regulation and litigation , uh, over the FTCs non-compete rule. And as folks may know, the FTC had proposed a non-compete rule and an April that issued a final rule that would've imposed a nationwide and near total ban on non-compete terms and employment agreements. So , um, between an employer and an employee, we're not talking about sort of non-compete arrangements between two competitors, which is , uh, per se , unlawful. But , uh, we are here talking about an employer and an employee non-compete employment term. Um, and the FTC issued its rule on the premise that those non-compete terms constitute an unfair method of competition in violation of section five of the FTC Act. Um, if, if and when it was gonna come into effect, the rule with certain limited exceptions would've prevented companies from one entering into non-compete agreements with workers to enforcing any preexisting non-compete, non-compete clauses. Um, some exceptions for senior execs. And three , uh, prevent companies from representing that a worker was subject to a non-compete term. And this rule, the FTC proposed and issued would've preempted , uh, laws in about 46 states that permit non-compete terms and employment agreements, at least reasonably , um, limited non-compete terms. Uh, within hours of the FTC issuing the final rule, plaintiffs had sued to challenge , uh, the FTCs rule in Texas , um, saying that it exceeded the FTCs rulemaking authority. Uh, in July, the Texas District Court issued a preliminary injunction that blocked the FTC from enforcing the non-compete rule just against the plaintiffs in the case, but for the time being left the rest of the rule , um, while I consider whether to issue a permanent injunction in the scope of that , um, the district court said that the plaintiffs were likely to succeed on the merits of the claim that the FTC lacked the statu statutory authority to issue the non-compete rule , um, and that the FTCs decision to issue the rule was arbitrary and capricious. Um, a few weeks later in August, the district court issued its final ruling , uh, and issued a permanent injunction banning the FTCs rule from going into effect anywhere in the United States for the same reasons it entered the pi. Uh, since then, the FTC has appealed the decision to the Fifth Circuit. So , uh, we're waiting to see the outcome there. Um, as a, not really a side note, but in , in parallel, there are two other litigations filed over the FTCs rule. Uh, in Pennsylvania, a district court actually upheld the FTCs authority to issue the rule. Um, and in Florida, a district court had joined the non-compete rule, but only as to the application of the rule against the plaintiffs in that case. Um, I think though everyone thinks that the Texas decision is where the action is on whether or not we will actually ever see this rule come into effect. Um, so , uh, it may come as no surprise. That will be probably one of the developments will be watching in 2025. Uh, John, I think you're up next for number six.
Speaker 4:Yep . Number six. And continuing on the state theme. Um, we saw in 2024 , uh, a fair amount of state action, no pun intended , um, with respect to , uh, settlements in transactions , uh, between hospital systems, between providers. And so there are a few here, you know , uh, one in, in Pennsylvania , uh, involving UPMC, another in Connecticut involving , uh, different parties in California. Um, we saw a settlement , uh, relating to UCSF and Dignity. Just gonna give the, the high level , uh, just the facts, <laugh> overview of , of what's going on , um, in this space, which is, is if antitrust weren't complicated enough , um, we have, as, as I spoke about just a few minutes ago , um, a lot going on at the state level on a number of fronts. So there are different dimensions to this. Uh, you know, many states have their own , uh, merger enforcement regimes that are specific to healthcare. And we have seen, really, over the past few years, not just in 2024, more and more action by the states , uh, on a number fronts, but in particular on entering into what those of us who practice antitrust law call behavioral remedies or conduct type settlement settlements that really , um, you know, seek to , uh, prevent the parties from negotiating together with payers in certain instances, putting price caps on other types of things that allow the transaction to be effectuated yet , uh, limit in some ways the conduct that the combined system , um, can partake in. Um, and so we've seen, again, these settlements over the years , certainly in Washington, you know, Massachusetts, a number of years ago, I remember, entered into one, and we saw several just in 2024. Um, uh, and, and so look, as we, you know, we're gonna talk about this more in , um, you know, looking ahead to 2025, but the point is, there's more and more to consider as you are contemplating a potential transaction if you are in the healthcare space, and particularly, particularly if you are a hospital system. Um, it could certainly be the case hypothetically, that you could do a transaction where, you know, the, the, the Department of Justice or the Federal Trade Commission, you know, they don't raise significant concerns, but pursuant to a state regime that may not even be antitrust specific, but like healthcare access specific , um, the state may require certain conditions in order for the parties to close. And again, that's across several states. Um, and each of these states has different regimes, but there are some common themes involving , uh, you know, again , uh, having , uh, the parties not do combined pair contracting or placing, placing , placing price caps, placing commitments on the parties to operate certain service lines or certain facilities. Uh, and these are, these are becoming more common , uh, continuing the trend of, of state action in the healthcare and I trust enforcement space. So with that, I think we're, we're rounding out the top five, and happy to turn it back over to you, Alexis,
Speaker 3:Sean. Uh, yeah, picking up the theme, we've got , um, some litigation involving the FTC and a state A EG , um, in connection with US Anesthesia Partners as litigation that's been started over the last year, plus , um, starting with the FTC, they, they sued US Anesthesia partners, and its former majority private equity owner, WELS Carson , um, alleging a , a variety of things based on the , uh, alleged rollup of anesthesia practices by USAP , uh, over about a decade since 2012 , uh, alleging that those roll-ups or those acquisitions violated section seven of , um, the Clayton Act. Uh, the FFC also alleged that USAP and independent anesthesia groups that hadn't acquired, entered into price setting contracts , uh, that were called collaborations or professional services agreements, where USAP was billing payers under its own provider or tax ID for services that were being provided by the independent anesthesiologist, the FCC of that violated section one of the Sherman Act, the anti collusion law. Um, there were certain other acquisitions and billing contracts that the FTC alleged that combined violated Section two of the Sherman Acts of the anti monopolization law. Uh, the FCC said that there was yet another agreement that , uh, USP had entered into with another anesthesia provider to allocate markets that violated section one of the Sherman Act, and that all of these things combined constituted an unfair method of competition under Section five. So, really a kitchen sink of a allegations in the FTCs complaint. And I, I think, as we may have even covered in a prior iteration of this podcast , um, really interesting case given, you know, the roll up , the collusion, the monopolization claims that so many of these acquisitions had been years and years ago. The earliest was 2012. Some of these acquisitions involved providers that had a very small, as low as 1% share , um, but a , a , a really interesting cutting edge case the FTC brought. So there were a couple developments in the last year, the first being in May, where , uh, federal judge in Texas refused to dismiss the claims against USAP itself, but did dismiss the claims against WELS Carson, which at the time of the case only owned about a 23% ownership stake in USAP . So, with respect to USAP , which had raised constitutional claims saying the FFC didn't have the authority to bring its case , uh, the court rejected those claims saying that USAP could raise those constitutional claims later on , uh, after the merits case was wrapped up. And then as to Welsh Carson, the court said that its minority ownership stake and the receipt of profits from USAP wasn't enough to show that the PE investor had violated the antitrust laws, specifically the FTC Act. Um, the court said he , he couldn't find any precedent for holding that a minority non-controlling investor, even one that was , uh, quote unquote hands-on, like, well , Carson was alleged to be , um, couldn't find any precedent that that minority investor would be liable under the FTC act. Um, afterward, USAP appealed , uh, the refusal to dismiss the case against it to the Fifth Circuit, but that was denied. Or in other words, the Fifth Circuit affirmed. So that , uh, organization still in the case. Um, uh, and then last but not lease last February , um, USAP settled a similar case brought by the Colorado ag , uh, which required SAP to give up certain exclusive contracts with , uh, handful of hospitals, provide the state with a list of medical providers or professionals, and wave , uh, certain non-competes in those , uh, arrangements. Um, provide notice requirements to plans if , um, if , if USAP was planning to buy an anesthesia practice in Colorado and other terms , uh, and is required to pay a , a , uh, make a payment of 200,000 to the ag . So , um, a lot wrapped up , um, more to go in this case, but a a lot of breaking news over the course of the year. Now we turn it over to, actually, I'm continuing on this one, right, John number four? Yep .
Speaker 5:Yep . It's all
Speaker 3:You. It's all me. So, yeah, we actually , um, in a relatively quiet year for hospital merger enforcement at the federal level, we saw the FCC bring one case , uh, when the FCC sought to block Novo's Pro proposed acquisitions , uh, of two hospitals from CHS and all . Um, for full disclosure, I, I did work on the later stages of this case and the litigation. Um, but , uh, in some ways it was a traditional FTC case, but maybe with a, a unique outcome. Um, the FFC had alleged that the transaction where a farm inpatient general acute care services, you know, traditional product market alleges in east, in the eastern Lake Norman, North Carolina area, which was , uh, an area that consisted of Irondale County and the northern part of Mecklenburg County, which is just , uh, kind of the northern part of where Charlotte is. Um, this was , uh, the first hospital case the FTC had brought since it issued the 2023 murder guidelines. Um, the defendants in the case , uh, raised a bunch of arguments. I'd say the main ones were that one, the FTC geographic market was, was far too narrow and excluded some key competitors to the parties. Uh, two, that the hospitals that were being acquired were in poor financial condition, were weak and declining , uh, competitors, and of , of relatively little or no competitive significance going forward. And that three , uh, Devon was really the only available buyer, and that it would make needed investments in the hospitals to keep them open and improve the quality of services provided. Um, the district court agreed that the F C's primary geographic market was too narrow, but said one of the FTCs backup broader markets was a relevant geographic market. And the court said that the FT C had satisfied its burden to show that the transaction , uh, was presumptively unlawful under the 2010 and 2023 murder guidelines. But interestingly, the court denied the FTCs preliminary injunction motion anyway, because defendants had rebutted the Ft C'S Prima fascia case by showing that the one of the two hospitals was general acute care. The other was a , a behavioral health hospital. Uh, but the defendants had rebutted the showing that the acquisition of the general acute care hospital was unlawful, saying that it was a weakened, not a sustainable competitor, and that the deal was as likely to enhance competition as it was to potentially reduce competition, given that the acquirer was gonna invest in service lines, the medical staff improve the facilities. Um, the court also said that the equities favored denying the PI because there was no risk of immediate pricing increases in light of commitments that defendants had made to freeze prices at , uh, the acquired hospital, and that the public interest wouldn't be served by denying the injunction and therefore preventing the investments in , in the, the hospitals to move forward. Uh, subsequently though, the FTC appealed to the four circuit, and on a two one split panel vote and overwritten dissent , uh, the four circuit imposed a stay of the deal from preventing the deal from closing, pending an appeal. Uh, at that point, the deal was abandoned and the district court's opinion was later vacated. So , um, y you know, the transaction didn't proceed, but I think the case still shows that there can be a path to rebutting the FTCs case , uh, on certain grounds, geographic market and, and financial condition arguments included in that. Um, but it does also show how challenging can be to kind of sustain these deals , uh, over the course of, of long litigation , uh, and FTC opposition. So, John, I'm turning it over to you for our number three development.
Speaker 4:Yeah. And continuing on the theme of, of federal challenges to transactions. Number three is , um, the Department of Justice Antitrust Division's action against the proposed transaction between UnitedHealth and edis . Um, DOJ filed its complaint on November 12th in the district, federal district court , uh, in Maryland , uh, alleging that the transaction between these two parties would negatively affect care, and I'm quoting for vulnerable patients and home health and hospice nurses critical to providing that care. So , uh, a , a somewhat colorful press release from the , our , our friends at the Justice Department whoe that the $3.3 billion , um, proposed acquisition of Meis by United would , um, violate the antitrust laws , uh, uh, specifically section seven of the Clayton Act, because it would substantially lessen competition. Um, the, the complaint , uh, alleges that their , they're close competitors with respect to home health and hospice services, and that their reduction in that competition , uh, would be anti-competitive. Also, of note, and, and we're just providing a , a factual overview here based on publicly available information, but also of note , um, the DOJ also alleges that , uh, the parties, I think specifically United , um, did not appropriately certify compliance with the second request. And so , uh, interesting part of the complaint there on second request compliance for US practitioners, again, the , the , the action has been filed. Um, I don't wanna get in front of Alexis, but <laugh>, it's not over, and it's something certainly we'll be talking about for the fourth coming year. So that's it for number three. Uh, Alexis barely had a chance to catch his breath, <laugh> , so sorry to turn it back over to you for number two. For number one , uh, just , uh, spoiler alert , uh, I'm gonna talk a little bit longer. So , uh, with , with that, Alexis, happy to turn it over to you for number two.
Speaker 3:Yeah, number two, showing the , the breath of healthcare segments, excuse me, at issue. Um, and with the cost of prescription drugs being kind of top of mind for a lot of folks, and really being at the center of a lot of public policy discussions and enforcement, we turned to a suit that the FTC brought in September against the three largest PBMs and affiliates , uh, who the FTC alleged had, or that they currently administer about 80% of all prescriptions in the us and that those PBMs had used any competitive and unfair reating practices to increase the price of insulin , uh, and increase the price for the end customer. So the complaint , uh, against Caremark Express Scripts at Optum , uh, was one where the FTC alleged that these PBMs had created exclusive or restricted formularies for insulin products, then leveraged their size and the threat of excluding the insulin products from their formularies to demand that the manufacturers pay rebates to PBMs based on wholesale acquisition cost or whack . Uh, according to the FTC, this had the result of pushing manufacturers to increase the list price of insulin , uh, resulting in higher rebates to PBMs, but also according to the FTC, resulting in higher prices to insulin consumers , uh, the FTC alleged that these practices amounted to three, three claims effectively. One, that the reating practices nstitute an unfair method of competition. Two, that the formulary exclusions constituted a quote unquote unfair act or practice. And three, that the courting here exploitative cost shifting to consumers , uh, and quote , constituted unfair act or practice , um, in each case, allegedly in violation of section five of the FTC Act. Um, I think this case is, is significant for a few reasons. One being that the fts bringing a , what we call a standalone Section five theory , uh, meaning that the conduct is alleging violate Section five and isn't really relying on section one or two of the Sherman Act. Um , but just section five , uh, and significant because only one of the claims is really a pure competition claim and unfair competition claim. Um, the rest sound to me more in sort of consumer protection on fair actor practice. Um, but we'll be interesting to see how the FTC litigates this , um, the suit , uh, was voted out by the three Democrat commissioners. The two Republicans on the commission were recused on the matter. So unless those recusals were temporary, that suggests to me that, you know, even with a Republican majority eventually taking over the FTC in the coming year, that the FTC may not have enough votes to settle or withdraw that case from adjudication. So , uh, that case may be proceeding, I suppose, anything's possible, but we'll see. And that trial scheduled to start , uh, in August, at the end of August this year. So, John , take us to number one.
Speaker 4:Yes, excited to tell you number one, which was easy, I think to arrive at, which is the New Hart Scott Rodino Act rules. Super exciting <laugh> . Um, and , uh, and there's good and bad news with this, right? So, background is when you do a transaction of a certain size , uh, involving , uh, parties of a certain size , um, the parties have to affirmatively notify the Federal Trade Commission and Department of Justice, submit certain information and go through a 30 day waiting period that can be extended in , in various circumstances. The rules on the stuff that you have to give pursuant to this process have largely been the same for 40 years. Some changes here and there. Uh, Alexis can, can correct me if I'm editorializing, he thinks inaccurately, but generally, this regime has been fairly , uh, sta I wanna say stable, but it's called for the similar types of information for decades. In June of 23, the FTC , uh, proposed , uh, uh, very, you know, sweeping changes, onerous proposals regarding , um, the information that would be required. Uh , and then on October 10th, 2024 , uh, thus being number one in 2024 , um, they unanimously they being the FTC unanimously approved , um, the proposed rules , uh, in a final rule that's slightly different than the proposed rule. So the good news for, for those of us who practice it, or those of , um, those parties who have to go through this process, the good news from a practitioner perspective, from a private party perspective, is that at least some of them are onerous proposals. And the proposed rule, were not in the final rule. Okay? So, you know, requirements like reporting on how a deal affects labor obligations to produce deal timeline mandates to produce drafts of deal related documents, names, and messaging systems, a few other things, those are out. Um, the other good news is early termination , uh, which is , uh, a way or a mechanism by which , uh, the government can, can, can , uh, clear a transaction prior to the expiration of the 30 day waiting period that had been suspended way back, I think during Covid , right, Alexis , um, and just kind of stayed <laugh> during the last few years. Exactly. Yeah. So it's sort of a, a , a , a permanent emergency , um, that that is going to be back when these rules go into effect on Feb 10. Um, so that's, that's another piece of good news. Um, you know , a lot, there's a lot to unpack here, and, and there's tons of webinars and articles from a lot of really great practitioners, not just Alexis or me or our law firms , um, out there. But at the end of the day, this is a very different system, I think , um, substantially different in terms of, you know, the, the , the , the substantive disclosure requirements that are new in the final rule, including, you know, describing the strategic rationale for the deal, producing documents that talk about the rationale, talking about, you know, where the parties may compete or may have a vertical relationship with each other. Um, the, the further separation between what's required of buyer and seller and further separation , um, and change in terms of what is going to be required from parties if they compete versus if they don't compete . Um, there's a lot, like I said, not just, not just to unpack in terms of the, the, I think the rule is something like 900 pages, but you know, what will really be interesting for those of us who do this just to get ahead of 2025 a bit, is living with this rule and seeing what it really means in terms of having HSR forms put together, having those forms accepted, or those filings rather accepted by the government, and seeing how the information produced may affect the substantive review of the transactions. And so that was our number one , uh, new HSR rules in 2024. We now turn the page to 2025 and what's , uh, we think are the top 10 , uh, developments, I guess it would, is the wrong word, what to watch for <laugh> in 2025, what we're curious about. And with that, I'll turn it over to Alexis for number 10.
Speaker 3:Thanks, John . Definitely agree that HSR rules are a very big deal. Um, so , um, lots of even watch there , uh, in the coming year. Um, so yeah, number 10 , um, you know, we had some developments in 24, but we didn't have room for it. So, but it's case I'm gonna watch in 25. It's coming to us from North Carolina, where the State Supreme Court breathed new life into a case challenging the state's certificate of need or CON system. Uh, the case is called Singleton versus North Carolina Department of Health and Human Services. Um, in it , a ophthalmologist is challenging the state's CON law saying that it effectively prevents him from using the n or in his own facility to conduct surgeries unless he has CON approval. He says that the law is effectively granting a monopoly to a local hospital and violates the state's constitution. Uh, a state trial court and an appeals court dismissed his case , uh, but the North Carolina Supreme Court reversed and ordered , uh, the lower court decisions vacated, and for the trial court to , uh, reconsider the constitutionality of the state's COM law. Today, I think there's around 35 or so states with some version of a CON law . So , uh, a decision in North Carolina that that law is unconstitutional, could potentially, theoretically , uh, spur challenges in other states would certainly be a big deal for providers , uh, of all kinds in those states. So that's , uh, a case I'll be watching over the coming year . Uh, John , over to you from number nine.
Speaker 4:Great, thanks so much. So , um, we talked about the states, what's coming on the states. We saw some states , um, like Oregon and California, actually reject some changes with respect to reporting requirements for private equity firms. Um, we also saw other states, I think, like Pennsylvania and some others , uh, decline Florida declined to put in new merger enforcement regimes for healthcare. But , um, there's been a lot of chatter about possible legislation in a number of states. So , uh, not just , uh, you know, the, the, the traditional, what we call blue states , um, having ha uh , more regulations with respect to transactions. But, you know, some, some red states too, like Indiana last year. And so we're looking out in 2025 and wondering what other states, <laugh> are going to either resurrect maybe failed legislation , um, that would impact the healthcare industries, or adopt, you know, me too , regimes like , uh, that, that Oregon has with respect to healthcare transactions that I California has, which I mentioned. And so we're, we're definitely taking a close look at, you know, what will be happening in the next year with potential new , uh, material change notice transaction , uh, requirements. Alexis.
Speaker 3:All right , number eight , uh, picks up on a development John mentioned in 24, which is the United essis , uh, case and , and wondering and watching for what happens in that case. I think it's interesting , um, not just for the, the product market issue of home health and hospice, which I don't believe has been litigated before. I could be wrong, but I'm not aware of a case. Um, so they're interesting product market issues there, but , um, the DOJ also alleged , uh, markets for home health , uh, nurses and hospice nurses, so effectively a labor market claim. Um, interestingly, the FTC alleged , uh, see , still pretty novel claims as far as I know. The FT is really the first one to alleged labor market claim in Kroger Albertsons supermarket merger, where the court said just , uh, a couple weeks ago that the FTC had plausibly made outta a case that such a market could exist when it came to union grocery workers. Um, but, but held that the FC failed to carry its burden to show that there was gonna be an anti-competitive effect in that market. It'll be interesting to watch how the labor market claim is handled in the United Essis case. Um, there's also, you know, a litigate the fix element as the parties have proposed , uh, a divestiture, and whether that's sufficient , um, and whether the buyer is seen as a good buyer for the assets . So a lot of interesting issues for antitrust nerds , uh, like, like us to, to keep watch . Um, so that's number eight. And I think, John , you've got a part one and two coming up next.
Speaker 4:I do, I do, yes. And I , I, I resent being called an antitrust alert nerd, by the way, but
Speaker 3:That's okay.
Speaker 4:So , yes, we, we think this is so big to look forward to in 25 that we've separated it into two after much discussion, which is, as some , uh, may be aware, we're going to have a new president and a new administration here. And as a result, and Alexis will get to this later in more detail with the agencies , um, and, and the who at the agencies. But in terms of the what , uh, we are looking forward to , uh, what will happen in merger review on a number of fronts. So the HSR rules I spoke about , um, that were finalized, those were a five oh vote from FTC bipartisan, so we don't expect, at least, I don't expect real changes on that front. But in other , um, merger related issues, I think there's two, there , there are several things. And so for number seven , um, I don't wanna say it's less important, but , uh, with respect to healthcare transactions at the federal level, we're going to be really interested to see if the approach from the , uh, agencies is going to change at all with respect to private equity, private equity and healthcare, whether there's gonna continue to be the skepticism we've seen, and whether as Alexis just discussed with respect to labor market issues, whether in investigations and, and potentially in litigation, whether their agencies are gonna continue to focus on competition for labor and how that will play out , uh, over the forthcoming year or this year. And then number six , um, which I think is a , a , a really significant , uh, potential return to prebi administration, antitrust enforcement that impacts not just healthcare, but other industries, is whether the agencies are gonna be more amenable to structural divestitures or settlements. In other words, if you have parties where they're merging , um, and they compete on , uh, you know , maybe one or two service lines or product lines , uh, and there may be an issue in one of those, but on, you know, the other 10, 12 or even more areas or product markets or services, there's no issue. Um, you know, historically prior to the, the current administration, those transactions, particularly pharmaceutical transactions , um, were ripe for settlement where the parties would sell to a third party , um, the, the, the , uh, the business that posed the competitive problem and remedy the, the, the alleged competitive problem. Um, whether that comes back, how that comes back, I think will be interesting. It will impact, you know, certainly how , uh, the viability of transactions , uh, the likelihood of success of getting deals done. And , um, I think we have reason to believe that there will be more receptiveness to such settlements and, and pretty stark contrast to the last few years. Um, moving , uh, moving on , uh, like sticking with at least the ftc, I think Alexis, you've got number five.
Speaker 3:Yeah, number five , uh, picking up on development for from 24 is, you know, the fate of the FTCs non-compete rule . Obviously a big decision in Texas. Uh, the FTC, as I mentioned, appeal to the Fifth Circuit. Uh, the FTC submitted its , uh, brief in that case just after the new year. Um, so we'll see what the Fifth Circuit decides. I have to surmise that the betting money is that the conservative leaning Fifth Circuit is probably gonna uphold , uh, the district court's decision in joining the rule. Um, there's also the potential, once there's a Republican majority at the FTC, that , um, that rule could be withdrawn potentially. Um, both republicans currently at the FTC , uh, opposed issuing the rule , uh, when they , if , well, presumably when they get the , the third Republican vote , uh, confirmed to, to be on the commission , uh, presumably the FTC could decide to withdraw that rule , um, or , or just let the litigation play out given , um, you know, where , where that may be headed. But that's certainly a , a big deal, not just for healthcare all industries, but , um, definitely a big , uh, rule in litigation to, to watch in the coming year , John .
Speaker 4:Sure. So , um, uh, number four, you know, what's gonna happen with the healthcare statements and collaboration guidelines. These were withdrawn by the FTC and DOJ over the last couple of years. Um, I've spoken about it before. I know Alexis has too . We are somewhat hopeful, maybe foolishly so in, in looking to watch out for any guidance, additional guidance, not by enforcement, but by guidance , um, by the way of guidelines or, or public comment or speeches from the agencies just about healthcare, antitrust enforcement generally. Um, you know, the, the statements were critical. They were dated, but they were nevertheless critical to practitioners and understanding where the agencies are on the application of the antitrust loss to the healthcare industry. And so we are looking forward with bated breath , um, and again, hopeful that we will be getting more guidance on , uh, what the agencies are focused on in terms of potential competitive issues in the industry. Uh, Alexis
Speaker 3:And number three , uh, continuing the theme of what we'll say or what will go , uh, two more , the 23 merger guidelines and the section five enforcement statement , um, on the merger guidelines, those turned a year old in December. Uh , those were voted out in December , uh, 2023 at a time when there were only three Democrats on the commission and no Republicans. Um, so it'll be interesting to see what happens there for, for context, when the new agency leadership came in, when Biden , uh, came into office, the leadership repealed the vertical merger guidelines that had been just recently issued under the Trump FTC and DOJ , and those revisions led to the 2023 merger guidelines. Um, there have been a couple cases merger cases that have cited to the 23 3 merger guidelines, but I think a key question is whether that new agency leadership coming into the agency will retain those merger guidelines, revise them, repeal them outright, and go back to the prior guidelines. Um , and then in terms of the section five statement , um, that is sort of just kind of a refresher in 2022 , uh, under the Biden FTC, lie Kahn and the majority of Democrats there issued a policy statement regarding the scope of unfair methods of competition under section five of the FTC Act. Those were approved , uh, on a split three one vote , uh, over the objection of Republican Commissioner Wilson. Um, basically that statement had a robust view of the FTCs authority to enforce section five of the FTC Act, and identified a number of practices or transactions that could coate constitute Section five violations , um, that replaced prior section five , uh, policy and for , uh, guidance issued in 2015. So it'll be interesting to see again, once new , uh, a new majority at the FT C comes in, whether they decide to withdraw the latest Lena Khan era section five , uh, statement , uh, and replace it with something else, or go back to the 2015 statement. So more policy , uh, changes on the horizon to, to watch out for John number two.
Speaker 4:Yes , uh, thanks, Alexis. So number two is what happens on HSR? Um, you know, the, the challenge with any changes in regulations is even if they're drafted perfectly and comprehensively, there's al always necessarily some ambiguity and some interpretation. And so that's certainly the case with respect to merger review at the federal level. Uh, lot to look out for, for this year as we , as we go live on Feb 10. Um, you know, including how long, you know, will it take for , uh, transactions to be accepted as having complete filings? You know, typically as Alexis well knows , um, it's perfunctory, at least in my experience, and, and I'm sure on Alexis's as well, where you make it an HSR filing. And unless something really goes wrong, and it's rare, you know, the, the 30 day period starts the day you file , uh, very rare for there to be any issues or delay in that. Um, here, maybe not. We'll see. Um, there's so much more of that parties are required to produce, particularly when there's overlap. And so we'll see what that looks like. There's going to be a lot of chatter about, you know, among US practitioners about whether, you know, certain types of information is gonna be sufficient to be , um, considered responsive to , uh, certain requests that are within the new rules. And I think it will take quite some time and quite a few filings before folks have a real handle on it. And so hopefully our, our clients are, are relatively understanding and patient with, with respect to less certainty in this space than there has been , um, as we navigate these changes this year and, and going forward. And with that, Alexis, you have the, the privilege and honor of giving us the number one , uh, thing to look forward to in healthcare antitrust , uh, enforcement in 2025.
Speaker 3:Thanks , Sean . Um, no surprise, and I think it's kind of , uh, been underneath or underlying kind of just about everything we've covered so far, which is , uh, the new leadership at the FTC and DOJ and the effect on healthcare enforcement, andrus enforcement , um, in the coming year and beyond. Um, what's , uh, a little bit different from this 0.4 years ago is we actually already know the names of the nominees for the new leadership at the agencies. Um, although I suppose there's still a question about how quickly a couple of those folks will get through the confirmation process in the Senate. Um, but starting at the FTC , uh, current Republican commissioner, Andrew Ferguson has been tapped to be the next chair of the FTC, that that change needs no Senate confirmation since he's a sitting commissioner. Um, he became a commissioner at the FTC last April. Before that he was Solicitor general in Virginia. He was chief , uh, counsel to US Senator Mitch McConnell. Mitch McConnell Kentucky was counsel on the Senate Judiciary Committee. He practiced law at law firms. He clerked for , uh, judge Justice Clarence Thomas, and on the DC Circuit , um, you know, haven't seen too, too much specific to healthcare. A lot of the focus, I think, on, on Mr. Ferguson and a lot of these nominees has been kind of on the , their views on, on big tech and tech issues. Um, but what we know so far from this time was on the commission that he's voted in favor , uh, of a couple merger challenge. None, none in the healthcare space specifically. Um, but he has dissented from the FTC issuing the non-compete rule from the FTCs withdrawal of the guidelines , uh, for collaboration among competitors. Uh, he raised concerns about the staff's interim report on PBMs, but he even so voted with the Democrats to issue that report. Um, but we'll, we'll see , uh, what else , uh, he has to say about healthcare in the coming months and weeks. Um, next , uh, mark Meor has been a tap to be a nominee to fill this seat currently held by Chair Khan . Um, incidentally, for folks who don't know, she can actually stay in that seat until she's confirmed. I don't know if that will happen. I would expect she'd probably step down sooner than that, but that's a possibility to , you never know thinking these uncertain times what will happen. Um , but , uh, Mr. Midor is currently a partner at the firm, Crescent Meor Powers in a visiting fellow at the Heritage Foundation. Uh, he's been , uh, uh, deputy Chief Counsel for Antitrust in competition to Republican Senator Mike Lee. Um, he has previously been an attorney at the FTC and DOJ for a decade. Um, again, haven't seen as much said , uh, from him on, on healthcare enforcement specifically to date. Um, and then finally over at the DOJ Abigail Slater has been nominated to lead the antitrust division , uh, as Assistant Attorney General Gail , as I think John, you probably , uh, know her like I do from our time at the FTC. Um, she's a native of Ireland, who began her career in private practice, then came over , um, to the States and served as a staff attorney at the FTC and as an attorney advisor to Democratic Commissioner Julie Brill. Yep , yep , yep . She then had , yeah, she then had a , a , a variety of roles as general counsel of the Internet Association. She worked as a policy advisor , uh, in the National Economic Council in the first Trump administration. Then she worked at Roku Fox, and most recently she was a policy advisor to , uh, then senator and now VP elect JD Vance. So , um, a lot of new faces , uh, in some ways, but , um, you know, I , I think, you know, very credible names, serious. Um , people will be serious , uh, antitrust and enforcers , um, as we've been alluding to. We would expect to see changes in some policies , uh, and rules. I think when it comes to healthcare. John, you obviously should weigh in, but I think sort of certain areas or a lot of areas that are healthcare have been bipartisan, maybe even non-partisan, such as provider murder enforcement. So I wouldn't expect , yeah,
Speaker 4:I , I agree. Abs absolutely
Speaker 3:Changes. You know, maybe like you said on the settlements, especially in pharma, we see may see more of willingness. Um , but there's a lot here I think that could change, especially the more novel or aggressive theories that have been pursued by , uh, the leadership over the last four years that could , um, come back to kind of more of the middle , uh, or more traditional approach. But obviously a lot could change and , um, you know, the future is , uh, can be very uncertain. Um, but I don't know if you have anything to add there, John , but that's what I had for our number one thing to watch in the next
Speaker 4:Year . No, I think you, I think you covered it , uh, comprehensively. Um, and it , you know, lot to look forward to <laugh> this year as we see things unfolding in new administration.
Speaker 3:Yeah. So that's our definitive, completely scientific list of the top 10 developments last year and what to watch. But , uh, once again, it's been great doing this with you, John. Uh, thanks to the HLA for having us. And thanks to everybody for, for listening. Assuming we are getting listeners.
Speaker 4:Absolutely. Thanks for doing this, Alexis. Always happy to do this with you every year. It's become a real great tradition.
Speaker 3:Absolutely. Happy New Year , everyone. Uh, look forward to , uh, seeing the headlines in healthcare and antitrust . Take care.
Speaker 4:Take care.
Speaker 2:Thank you for listening. If you enjoyed this episode, be sure to subscribe to ALA's speaking of Health Law, wherever you get your podcasts. To learn more about a HLA and the educational resources available to the health law community, visit American health law.org.