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AHLA's Speaking of Health Law
Top Ten 2025: Antitrust Trends and Forecast for the Health Care Industry Under a New Administration
Based on AHLA's annual Health Law Connections article, this special series brings together thought leaders from across the health law field to discuss the top ten issues of 2025. In the fourth episode, H. Kristie Xian, Associate, Jones Day, speaks with Katherine I. Funk, Shareholder, Baker Donelson Bearman Caldwell & Berkowitz PC, about how the new administration might approach health care antitrust enforcement. They discuss the new Merger Guidelines, the revised Hart-Scott-Rodino filing rules, the interim report on pharmacy benefit managers, and where enforcement may diverge from the prior administration. From AHLA’s Antitrust Practice Group.
Watch the conversation here.
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Speaker 2:A HLA is pleased to present this special series highlighting the top 10 health law issues of 2025, where we bring together thought leaders from across the health law field to discuss the major trends and developments of the year. To stay updated on all the major health law news, subscribe to ALA's New Health Law Daily podcast, available exclusively for premium members@americanhealthlaw.org slash daily podcast .
Speaker 3:Hi there, my name is Kristi , she , I'm an associate with Jones Day's Antitrust and Competition practice, and welcome to the A HLA Top 10 Podcast series.
Speaker 4:Good. A good , good morning. I'm Katie Funk. I'm a partner with , uh, baker Donaldson in Washington, dc Um, I'm an antitrust attorney with a focus in healthcare, and early in my career, I was at the Federal Trade Commission.
Speaker 3:So Katie , I would love to get right into it. We've seen a lot of changes in these last few weeks as a new administration has come to power, and we've actually seen two major changes to merger enforcement rules from the Biden administration that , um, will surely affect practitioners going forward. First , uh, the, the Department of Justice and the Federal Trade Commission , um, has issued new merger guidelines. They issued them in December of 2023, which significantly revised the prior approach to both horizontal and vertical transactions. Second, the FTC and DOJ finalized changes to the pre-merger notification form under the HSR Act, the first significant update to the Harsco rodino form since 1976. Let's talk about these changes to each and what it means for healthcare entities.
Speaker 4:Sure. Um, both of these, both of these changes , uh, are, are going to affect , uh, how mergers are reviewed by the Federal Trade Commission and the Department of Justice . Um , let's start with the , with the revisions to the merger guidelines . So those have gone into effect. Those were adopted by the Department of Justice and the Federal Trade Commission in December of 2023 , and they've been implemented. Um, it's notable , uh, that they have been in effect for over a year now, and courts have had an opportunity to , uh, to, to , to look at those new merger guidelines and assess those merger guidelines. And with respect to whether or not we're going to see , uh, the, the Trump administration make wholesale revisions to those merger guidelines , I think there's a couple things that we need to keep in mind. The first is that , as I said , the merger guidelines have been in effect for , uh, the revised merger guidelines have been in effect for more than a year now. And so courts have had an opportunity to assess those guidelines in, in their decision making process. And we've seen over the past year that courts have have adopted some of the thinking , um, in those new and revised merger guidelines. Uh, we've seen that in, in sort of non-healthcare related cases , um, including , um, uh, the, the accessible luxury case , um, in handbags , um, and also in the supermarkets case out in, in Washington DC or in wa , the state of Washington with respect to Kroger's and , and Albertson. So , um, keep that in mind. And then I think it's also keep , uh, it's important to keep in mind some comments that now Chair Ferguson has made about those, those revised merger guidelines. He was asked , uh, whether or not he would seek changes to those guidelines if he were to become chair, and now of course, he is chair. But he said at the time that although those guidelines are not what he would have put out, he also doesn't think it's, it's good , um, for there to be wholesale changes in the, in the merger guidelines, every timing , and every time an administration changes. So, what I think we can expect, and of course we also have, Gail Slater will be the head of the Department of Justice Antitrust Division when she's confirmed by, by the Senate. But I think what we will see is maybe , um, that the Trump administration enforcers will emphasize certain parts of those guidelines and de-emphasize other parts. So I think that , um, to the extent that those guidelines can be used in support of the consumer welfare standard, which is sort of the more traditional over the past 40 years, the more traditional , uh, standard in , in antitrust, I think we'll, we'll see the Trump administration emphasize those portions of the guidelines that are consistent with the consumer welfare standards. I also think that both Commissioner Ferguson and , and Gail Slater have indicated that they are, they, they view vertical transactions , um, not necessarily as a , in a separate framework from horizontal transactions. So I think we're gonna continue to see sort of those, those aspects of the merger guidelines being enforced or being emphasized by this administration. With regard to the second question that you asked, the revised Har Scott Rodino filing , um, guidelines , uh, those , uh, went under those, those guidelines that you said, or those, I'm sorry, those rules , um, for filing harsco , those underwent the , a wholesale , uh, review for the first time since 1978. Um, everything from how the form looks to what type of information is, is required of parties , uh, those went through a , a formal rulemaking process. They , it was an iterative rulemaking process, and I think it's important to note that the Federal Trade Commission, when they voted on the final rule in, in October, it was a five zero vote. So Commissioner now, chair Ferguson , um, voted in favor of the, of the new rules. And as he said at the time in his, in his , uh, uh, opinion , um, they, they're not necessarily everything that he would've wanted. And some, and some goes , some of the requirements go further than he would've request wanted, but he viewed the rulemaking process as , um, as, as within the FTC got , uh, statutory mandate. He, and he, and he, he provided an analysis indicating that he believed that the rulemaking was lawful and was done in accordance with the Administrative Procedures Act. And in short , he provided a defense to that rulemaking in his, in his , in his opinion, that he issued. Um , and those are to go into effect on February 10th, 2020. Well, on January 10th , um, the US Chamber of Commerce , uh, filed a , a de , uh, an action in Texas, in a federal court in Texas, seeking a declaratory judgment and an injunction in injunctive relief to, to stop those , that rulemaking from going into effect , um, arguing that the rulemaking violated the Administrative Procedures Act and was other and otherwise unconstitutional. That case has been teed up. Um, notably, the Federal Trade Commission has not responded to that complaint yet. Um, and so we don't know what's gonna happen. We don't know whether the rulemaking is going to go into effect on February 10th or not. Um, so right now , uh, people should plan that that rulemaking will go into effect because again, there has not been an injunction issued. Um, and indeed the Federal Trade Commission has not even responded to the case yet . So what I would tell folks who are listening is try to keep up to date on whether the , on how that case proceeds in Texas.
Speaker 3:And Katie , it certainly seems like practitioners who are, who do have , uh, HSR practices or are filing , um, or are making filings on behalf of clients under the HSR Act, should really not expect to go back to the way things were, the way things were have been for 30 some years. And in fact , um, unfortunately, somebody might be , have to be the Guinea pig come February 10th. Is that, is that fair to say?
Speaker 4:I I think that would be a prudent way to approach the , uh, the, the new HSR filing guidelines. Yes .
Speaker 3:Great . Um, one, one other topic that I want to move on to , Katie, is beyond merger enforcement , um, we saw that in the Biden administration, they targeted alleged com anti-competitive practices in the healthcare and pharmaceutical industries, notably pursuing investigations into pharmacy benefit managers or PBMs. What can you tell us about the state of those investigations and how they might play out in 2025?
Speaker 4:Well, Christie , we could take , we could talk about the PBM investigations for hours. So , um, I'll try to condense it to the short amount of time that we had. Um, I think suffice it to say that the , the summary is in, in the summer of 2022 , um, the Federal Trade Commission issued , um, actually the summer of 2021, apologies. The Federal Trade Commission issued , uh, uh, what's called a six B study, which is under section 60 of the Federal Trade Commission Act, which gives the Federal Trade Commission the authority to do , um, investigations or understand investigations of industries for the purposes , purposes of understanding those industries. And notably, these are not adjudicated or , um, or, or rule , uh, investigations. These are fact finding . These are fact finding investigations. So the FTC issued subpoenas to all of the major pharmacy benefit managers seeking information on how they're , how they do business , um, rebate , how they do rebate with the pharmaceutical companies, et cetera . Notably, the this rule, this six B study was done because , um, there have been changes in the pharmacy benefit manager , um, industry over the past 20 years. And in the early two thousands, FTC had done some investigations and issued some studies on the pharmacy benefit manager industry and, and , um, and, and had come to certain conclusions about the industry. This six study was an attempt to sort of update that , those fact findings . So they issued the PBM study , um, in 2021, and then earlier this summer in 2024 , um, the FTC issued an interim , uh, interim report. Um, and that interim report was criticized. Commissioner Ferguson, commissioner Holyoke criticized , um, that, that interim report , um, as being rushed and, and not fully , um, and not very fulsome in their words. Fast forward to this fall in September, the Federal Trade Commission filed a lawsuit against the Pharmacy Benefit Managers , um, in the FTC administrative proceedings as an administrative hearing process , um, followed the lawsuit , um, suggesting that the way that the pharmacy benefit managers contracted with pharmaceutical companies , um, issuing rebates , um, had the effect of increasing , um, of , of adversely affecting competition and increasing the prices that people pay , um, when they go to the pharmacy and , and get their, get their drugs . What's important about that litigation is first it's in the administrative hearing process , so it's not in federal court, it's in the FTC administrative hearing process. And second, both Commissioner Holyoke and commissioner then Commissioner Ferguson abstained, they did not vote on whether to issue that, that lawsuit. Um, so that case is now ongoing at the Federal Trade Commission. Um, the, the PBMs a , uh, filed a lawsuit in the Eastern District of Missouri challenging the constitutionality of the FTC process and whether that administrative hearing was constitutional, that case is ongoing in the Eastern District of Missouri. Um, the case is still on against the PBMs. It's still ongoing in the FTC administrative hearing process, and it's scheduled for trial in August of this year. Um, and then meanwhile , uh, just a couple weeks ago, just before the administration changed over, the FTC issued a second interim report with regard to its six B study , in that, in that interim report, which again was voted out five, nothing by the far by the commissioners, the FTC staff indicated that they had found in, in, in reviewing the , the PBM information had found evidence that the PBMs were steering patients to their in-house pharmacies, and that the PBMs , um, were, were responsible for filling something like 65 to 75% of all specialty pharmaceuticals, which also happened to be some of the more expensive pharmaceutical , um, and prescriptions that people have to fill. So, to summarize, there's a lot going on in the PBM space given the , uh, given that the majority of the commission has, has voted out the , uh, the six B study and also these interim reports , um, I think that we can con , we will , we can anticipate that the Federal Trade Commission will continue its investigations of pharmacy benefit managers. We don't know what's gonna happen with the administrative hearing and the administrative trial that's scheduled with regard to the PBM, but I think it's safe to say that the Federal Trade Commission under the Trump administration will continue to focus on , um, the, the price of pharmaceuticals and will , and will specifically focus on the role that the pharmacy benefit managers have in in that pricing .
Speaker 3:Katie , that's a, that's a great summary of all the , um, all the goings on , um, of , of PBMs and these investigations. Uh, just to , just to , um, help our listeners understand with that, that second interim report that was recently voted five oh by the commission, do we anticipate that there will be other interim reports going forward or , um, litigation that will come out of , um, this new interim report?
Speaker 4:So, that's a great question. Christie , and, and, and Commissioner Ferguson, now, chair Ferguson indicated in his , um, in a statement that he issued along with the interim report that he hopes to see a final report at some point. So I think that we're done seeing interim report , I think that we can anticipate a final report at some point in time. And again , um, remember the six B study is a, is a sort of fact finding investigation about an industry. Um, we've already seen one litigation kind of spin out from the six B study , um, without trying to look into crystal ball and , and predicting, I think that it would, it would not be surprising to me if the FTC were to bring additional litigation , um, arising out of the fact the fact finding that they'd done on the six B study and setting aside what the , the Federal Trade Commission might do. I think we might see a role of private entities picking up the, picking up the baton from the FTC and the fact finding that the FTC has done and using the six B studies potentially as a basis for law , uh, for private lawsuits.
Speaker 3:Uh, and Katie , we've talked a lot about , um, what the new administration will do or what they might do. And so I, I wanna pose to you very broadly, because I think that , uh, our listeners will be very interested. You know, we saw four years of an aggressively of a Biden administration aggressively enforce antitrust law against healthcare entities. Um, do you, what do you anticipate then that this administration will pose to healthcare entities going forward? Will a similar posture continue with the new Trump administration, particularly now as new leadership comes on board ?
Speaker 4:Well , Christie , that's about the a hundred million dollars question you've asked. I think , um, we can , we can see , uh, where Commissioner Ferguson and Commissioner Holyoke have acted with respect to healthcare entities. Um, and I think , um, what we see is that with respect to, for example, hospital transactions and provider transactions, the FTC has had a consistent approach for about the last 20 years. And, and when the FTC , um, since commissioner , uh, chair Ferguson and Commissioner Holyoke have been at the ftc, they have voted consistently with the way the f with that enforcement posture. So what I'm, so, I don't see a great divergence at the FTC with respect to how they enforce or how they review hospital transaction and provider transaction. Um, I think that there's probably to the extent that , that where we will see a divergence from the, the prior administration is with respect to a couple of issues. One is to the extent it's possible, I think that the Trump administration enforcers will be more open to divestitures and, and settlements that resolve , um, matters and, and allow the parties to go forward and , and finalize their transaction with divestitures that, that help maintain the status quo in the, in competition. Um, I think that this new administration will likely be more , uh, open to the investments that private equity might make in healthcare. Um, there has been, there was a lot of pushback in the prior administration with , with regard to , uh, private equity investments , um, and with regard to so-called roll up . Um, and IWI would imagine that there will be a lessening of that, of that resistance to private equity, although I know Chair Ferguson has stated that he, he intends to continue , uh, seeking to pro , you know, protect consumers and enforcing antitrust laws , um, as, as as necessary to, to , to maintain the , the mission of the Federal Trade Commission. But I do think there'll be more openness to private equity. I think , um, on the, we haven't talked much about the Department of Justice, but the Department of Justice is also very active in the healthcare space and in particular , um, with respect to entities such as UnitedHealthcare and other , um, health insurers that have vertically integrated , um, and are not just health insurers anymore, but have vertically integrated into the , into the provider space. Um, again, this shows an openness , uh, to, to not only look at horizontal transactions, but also vertical integration. I understand that , uh, that the Department of Justice is likely to continue its investigations into United Healthcare , um, and other vertically integrated entities. Um , and so I mean, I think in some , uh, it , we're not gonna see a wholesale change in the way that Federal Trade Commission and the Department of Justice look at the healthcare space . I think we're gonna see some differences around the edges , again , with respect to private equity, with respect to consent decrees. Um, but as we've seen in the past, I think, you know, over the course of the Biden administration, for the most part, when the FTC took actions against healthcare entities and the Department of Justice took actions against healthcare entities, those were not actions that were sort of outside the mainstream, like very early, that far outside what the mainstream had been with respect to how the , uh, FTC and the Department of Justice , um, engaged in antitrust enforcement with respect to healthcare.
Speaker 3:Thank you, Katie . That's a lot of bodder for folks out there to think about as we emerge into this new year. Um, I wanna put a plug in for Katie's co-authored article, the Antitrust Trends and Forecast for the Healthcare Industry under a New Administration Top 10 Issues in Healthcare Law of 2025. You can find this on the A HLA website. Um, and I wanna also thank the A HLA in particular with the Antitrust Practice Group of the A-H-A-H-L-A for hosting today. Um, I'm a vice chair , um, of the Antitrust Practice Group, and we , uh, through the practice group help you understand public and private enforcement activity and competition of policy affecting all sectors of the healthcare industry. Thank you once again, and thanks folks for tuning in to listen.
Speaker 4:Thank you.
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 .