DOJ, FTC tap state attorneys general to fight health care takeovers

The U.S. Department of Justice’s top antitrust regulator on Monday said the agency is boosting its relationship with state attorneys general to combat antitrust issues in health care.

The broader regulatory alliance could amplify scrutiny and litigation involving health care mergers and acquisitions.

Jonathan Kanter, assistant attorney general of the DOJ’s antitrust division, said competition in health care “is often the difference between life and death.”

“We are going to continue collectively to be vigorous and deliberate in our pursuit of making sure we are addressing all aspects of the health care system. It’s such an important priority,” Kanter said Monday during the Federal Trade Commission’s Third Annual Enforcers Summit.

That includes not only teaming the FTC with other federal agencies but also with the states.

“As for our work with state attorneys general, we have set up a new state relations unit, and I know we have many of our state partners with us here today.”

Kanter noted that state enforcement in health care predates federal enforcement.

“So we’ve invested and we will continue to invest in building out our state relations capacity and making sure that we are continuing to work alongside. We’ve seen important cases originate from our state partners and we’ve even had the opportunity to join them in some of those cases.”

He didn’t elaborate. But in its “2023 State AG Year in Review” report, Troutman Pepper Hamilton Sanders noted that last August DOJ and FTC staffers huddled with AGs in an antitrust boot camp focused on health care. This included discussions how to better coordinate on such things as hospital systems, pharmaceutical manufacturers and pharmacy benefits managers.

“State AG staffers and staffers from the (DOJ) and the FTC emphasized concerns about pricing throughout the health care industry, the hurdles posed by rampant consolidation trends, and the alleged expanding cloud of private equity in shaping the health care sector’s future,” the  Troutman Pepper report stated.

Related: Health care mergers facing added scrutiny from a wave of new state anti-trust laws

State AGs, such as Rhode Island’s Peter F. Neronha, have intervened in a number of proposed health care deals in recent years. In 2022, Neronha and the FTC filed a complaint in federal court seeking a temporary restraining order and preliminary injunction to halt a merger between Lifespan Corp. and Care New England Health System.

They argued that a deal between the state’s largest health care providers would hike costs and reduce quality of care for patients.

A week later the hospital systems scrapped merger plans.

“Working with state partners has been crucial,” FTC Chair Lina Khan said. She was unable to attend the event but conducted a pre-recorded video with Kanter.

On the federal level, the FTC, DOJ and Department of Health and Human Services last month said they would leverage their forces to fight private equity firms’ growing ownership and control of health care.

Last September the FTC sued private equity firm Welsh Carson Anderson & Stowe, which went on a buying spree of anesthesiology practices in Texas to form U.S. Anesthesia Partners. The FTC said the company had bought up every large anesthesiology practice in Texas as part of an illegal scheme to suppress competition and drive up prices.

Welsh Carson has blasted the suit as an “unprecedented overreach” and has asked the court to dismiss it.

On Monday, Khan said the FTC’s new merger guidelines give greater scrutiny to those sort of purchases. In the past, she said, rollup transactions might have escaped antitrust review because of the value of individual deals was low.

“The guidelines clarify that enforcers can assess an overall pattern of serial acquisitions or examine it as part of an industry trend rather than having to look at each deal in silo,” Kahn said.

Last July, the FTC sued to block IQVIA Holdings, the world’s largest health care data provider, from acquiring Propel Media, alleging it would give IQVIA a market-leading position in programmatic advertising for health care products.

The banter Monday between Kahn and Kanter echoed the neo-Brandeisian views of the Biden administration, a perspective anathema to the antitrust philosophy used by regulators for the prior 40 years.

Traditional antitrust regulators assail neo-Brandeisians for having a myopic focus on market concentration, as measured by market share. That contrasts to the traditional presumption that if a merger lowers prices for consumers, it likely is not anti-competitive. If there were concerns a deal was unfair, regulators often permitted behavioral remedies, such as selling off a division.

Regarding the FTC’s new merger guidelines, Khan said two areas are key in terms the previous guidelines had not explicitly talked about: labor markets and acquisitions involving platforms.

She cited the commission’s lawsuit to block Kroger’s acquisition of grocery chain Albertsons as one case that could not only harm consumers “but it also would harm workers and unionized workers in particular.”

The other prong of antitrust focus has been on a merger’s broader effects on platforms in the tech realm.

“In platforms markets and in digital markets, oftentimes the biggest threat, the most significant threat to incumbent platforms come not from direct replicas of those platforms but from adjacent markets, from markets that are adjacent to and sometimes rely on the incumbent platforms. So we need to be really multi-dimensional in how we’re understanding the competition implications,” Khan said.

“For example, a merger may be lessening competition on the platform, for the platform or to ultimately replace the platform. And those are all dynamics that we need to be keeping in mind.”