Calling health care “a large and critical part of our nation’s economy,” Deputy Assistant Attorney General Bernard (Barry) Nigro said that in 2016, health care spending by households, businesses and the government accounted for about 18 percent of the GDP and totaled $3.3 trillion, or about $10,343 per person.
Nigro, who is one of five deputy assistant attorneys general recently added to the Department of Justice’s Antitrust Division, asked attendees at the ABA’s Antitrust in Healthcare meeting held May 17 at the Ritz-Carlton Pentagon City in Arlington, Va., to imagine a reduction in competition that causes prices to rise by 5 percent throughout the industry.
That would result in $165 billion in annual consumer harm, he said.
And it is not just money that is at stake, Nigro said, but reduced quality and accessibility of health care by just 5 percent would cut short millions of lives.
“Therefore, few if any segments of our economy merit higher priority when it comes to antitrust enforcement,” he said.
In the area of criminal enforcement, Nigro said, “price fixing and naked market allocation agreements are effectively agreements to steal from consumers, whether in the form of higher prices or … fewer choices.”
He said DOJ had been working to detect and deter collusion in the generic pharmaceuticals industry. “In 2017, nearly 3.9 billion generic prescriptions were dispensed, accounting for 89 percent of all prescriptions filled in the U.S., but only 26 percent of the drug spend.”
Because so many Americans depend on generic drugs due to their affordability, “it’s critical that these markets remain competitive,” Nigro said.
Still, DOJ has found that some corporations and executives “have sought to enrich themselves at the expense of consumers who rely on these critical medications,” he said.
“It is hard to imagine a more brazen antitrust crime than colluding to take money out of the pockets of seniors and others whose health depends on prescription drugs,” Nigro said.
In late 2016, the Antitrust Division filed its first charges against two executives of a generic pharmaceutical company for price fixing, bid rigging and customer allocation for an antibiotic and a drug to treat diabetes. Both pled guilty and agreed to cooperate with DOJ in the ongoing investigation, Nigro said. Other criminal investigations are ongoing.
On the civil side, Nigro pointed out that in 2017, “the division won a major victory for American consumers in two major health-care insurance merger trials.”
He was referring to Anthem’s proposed acquisition of Cigna (“which would have been the largest proposed transaction in the health care industry”) and Aetna’s proposed acquisition of Humana.
The division believed that “the proposed transactions would have increased concentration and harmed competition among health insurers…. consumers would have born the consequences in the form of higher prices and reduced benefits,” he said.
Additionally, Nigro said the proposed mergers “would have deprived consumers and health-care providers of the innovation and collaboration necessary to improve health care outcomes.”
Currently, he said, the department is looking into CVS’s proposed acquisition of Aetna and Cigna’s proposed acquisition of Express Scripts.
In addition to mergers, Nigro said DOJ is actively challenging anticompetitive conduct by health-care providers, and is currently in litigation challenging Atrium Health’s practice of including “so-called anti-steering restrictions in its contracts with major health insurers.” DOJ claims the company “used these restrictions to protect itself from price competition and consumers lost the benefit of that competition,” he said. A trial is scheduled for next year.
Earlier this year, DOJ reached a settlement with Henry Ford Allegiance Health in Michigan regarding anticompetitive practices, Nigro said.
Nigro also addressed the division’s work in protecting taxpayers. “The federal government spends a significant part of its budget on health care-related fees, so it, too, like taxpayers, is harmed by anticompetitive conduct in the health care industry,” he said.
Therefore, he said, pursing treble damages under Section 4A of the Clayton Act
- deters cartels and other anticompetitive conduct.
- compensates taxpayers for the harms the government suffers due to antitrust violations.
Another component of the division’s work, Nigro said, is competition advocacy. Both individually and with the Federal Trade Commission, DOJ has worked to raise awareness of the importance of antitrust enforcement in the health care industry.
Summing up, Nigro said that “antitrust enforcement will continue to play an outsized role in the health care industry,” because competition:
- Keeps prices down.
- Broadens access to health care products and services.
- Promotes higher-quality care and.
- Encourages innovation.