FTC Sues Surescripts For Illegal Monopolization of E-Prescription Markets

The Federal Trade Commission (FTC) of the United States has sued Surescripts, a health information company, over allegations that the company used illegal vertical and horizontal restraints to maintain their monopoly over two electronic prescription, or “e-prescribing”, markets; eligibility and routing.

The complaint against Surescripts, which was filed in federal court on April 17, 2019, is just the latest example of the FTC’s commitment to preventing anticompetitive tactics across the healthcare industry. Such tactics are harmful to consumers and drive up the cost of healthcare in the United States. The FTC reached a global settlement with pharmaceutical manufacturer Teva Pharmaceuticals Industries Ltd., in February. The agreement meant that the manufacturer could no long reverse-payment patent settlement arguments that would block consumers from being able to access affordable generic drugs. Just last month the FTC barred another pharmaceutical company, this time Impax Laboratories LLC, from entering into reverse-payment settlements as well. They concluded that the company had used the tactic to prevent consumers being able to access generic versions of the extended-release opioid pain reliever Opana ER. The FTC had a record court victory last year when the federal court ordered AbbVie Inc., another pharmaceutical company, to pay $448 million to consumers who had been overcharged for the testosterone replacement drug Androgel because of the illegal tactics the company employed to maintain a monopoly on the drug.

The complaint filed on April 17, 2019 outlines that the FTC is seeking to undo the unfair methods Superscript employed and prevent them from doing so in the future. The FTC also wants to restore competition and provide consumers with monetary redress when possible.

“For the past decade, Surescripts has used a series of anticompetitive contracts throughout the e-prescribing industry to eliminate competition and keep out competitors,” said Bureau of Competition Director Bruce Hoffman. “Surescripts’s illegal contracts denied customers and, ultimately, patients, the benefits of competition – including lower prices, increased output, thriving innovation, higher quality, and more customer choice. Through this litigation, we hope to eliminate the anticompetitive conduct, open the relevant markets to competition, and redress the harm that Surescripts’s conduct has caused.”

E-prescribing methods allow patients to get more accurate, safer, and cheaper access to prescriptions over paper prescriptions. The FTC alleges that Surescripts monopolized two markets for e-prescription services;

The first is the market for routing e-prescriptions. Routing involves technology that allows a healthcare provider to send an electronic prescription to a pharmacy on behalf of a patient.

The other is the market for determining eligibility. This is a different service that allows healthcare providers to determine whether or not a patient is eligible for prescription coverage by accessing the coverage and benefits information of their insurance policy through a benefit manager at a pharmacy.

The FTC is accusing Surescripts of deliberately planning to prevent routing and eligibility customers from being able to use other platforms (known as multihoming) through anticompetitive exclusivity agreements and threats, as well as other tactics. The FTC allege that Surescripts acted to increase the cost of routing and eligibility multihoming with their exclusivity and loyalty contracts.

According to the complaint filed by the FTC, Surescripts were able to employ these tactics to prevent multiple other companies from making the routing and eligibility markets more competitive. The complaint says that the anticompetitive tactics employed by Surescripts from getting a foothold in the markets, thus allowing the company to maintain their 95% market share in both markets for a number of years. The complaint alleges the company succeeded in maintaining their monopolies despite the growth of the eligibility transactions – some 70 million routing transactions took place in 2008 compared to the 1.7 billion from 2017.

The vote to file the complaint passed at 5-0. The complaint was officially filed under the seal in the U.S District Court for the District of Columbia on April 17, 2019. There was also a redacted version of the complaint filed at the same time. The complaint alleges that the anticompetitive tactics employed by Surescripts are in violation of Section 2 of the Sherman Act, and are therefore an unfair method of competition that is in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

The FTC aims to improve competition and protect consumers. They may choose to step in when they suspect a company is in violation of the law and they feel it would be in the public interest to pursue proceedings. The case itself will be handled by the federal district court.

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