After much anticipation and a round of public comments on the draft guidelines released in January, the Department of Justice (DOJ), along with the Federal Trade Commission (FTC), officially issued the final Vertical Merger Review Guidelines, replacing the Non-Horizontal Merger Guidelines originally issued in 1984. The updated guidelines govern how federal antitrust agencies evaluate vertical, as well as other non-horizontal mergers. The guidelines outline three main sources of evidence for potential adverse competitive effects from vertical mergers: 1) Foreclosure and Raising Rivals’ Costs, 2) Access to Competitively Sensitive Information, and …

On January 10, the Department of Justice (DOJ), along with the Federal Trade Commission (FTC), released a new draft guideline for vertical merger review. As opposed to horizontal mergers, vertical mergers generally combine entities that operate at different levels in the same supply chain. As vertical mergers become more commonplace in the healthcare industry, they are increasingly raising antitrust concerns as they often times don’t trigger the same level of scrutiny as do horizontal mergers. The much needed new guidelines specifically targeting vertical mergers serve to withdraw and update the …

On January 10, California Governor Gavin Newsom released his 2020-2021 State Budget proposal. While the state budget process will not begin in earnest until after the Governor’s May Revise, the state budget provides a glimpse of likely California health care reforms. The Governor’s January Budget Proposal proposes the following: Proposal Goals Office of Health Care Affordability Increase price and quality transparency Develop cost targets for health care industry Address hospital cost trends by region, with focus on cost increases driven by delivery system consolidation Establish standards for advance evidence-based and …

On Thursday, December 12, 2019, the House passed H.R. 3, the Elijah Cummings Lower Drug Costs Now Act, with unanimous support of House Democrats, but only 2 Republican votes. While the primary provisions of the bill and the conclusions drawn in our original blog post remain unchanged, we highlight two changes made to the bill as described in our post before it was passed. First, the original bill required drug manufacturers that increase the price of a drug faster than the rate of inflation (benchmarked to prices in 2016) to …

On Thursday, January 31, 2019, the Trump Administration announced a proposed rule to eliminate rebates from drug manufacturers to pharmacy benefit managers (PBMs) in the Medicaid managed care and Medicare Part D programs. The proposed rule accomplishes this aim by removing safe-harbor protection[1] under the federal Anti-Kickback Statute (AKS)[2] for these rebates. In addition, the administration proposed new safe-harbor protections for rebates and other price reductions that will reduce the cost-sharing for patients when they purchase prescriptions and protect some flat PBM service fees (i.e. fees that are not tied …

In November 2018, The Source reported that CVS was finalizing its merger with Aetna after getting approval from the Justice Department. In the past two weeks, however, statements by Judge Richard Leon, a judge from the US District Court for the District of Columbia, have made that merger less certain. The approval from the Justice Department is conditional until approved by the courts. As a result, Judge Leon could rule to prevent the merger, but because the transaction already closed,[1] some legal experts have called untangling the companies akin to …

On November 21, 2018, the California Attorney General conditionally approved the Dignity Health and Catholic Health Initiatives (CHI) merger. The new merger would result in a new $28.4 billion organization called CommonSpirit Health.[1] CommonSpirit will operate 139 hospitals and 700 care sites nationwide, including 30 hospitals in California.[2] According to the California Attorney General’s press release, CommonSpirit Health must maintain emergency services and women’s healthcare services for ten years, and the AG has the right to review the impact of any changes to these services. CommonSpirit Health must also create …

A New York Times article came out today highlighting how hospital mergers result in higher healthcare prices to patients, based on research and analysis conducted by UC Berkeley’s Nicholas C. Petris Center. While hospitals claim that consolidation would save consumers money, the opposite is true due to reduced competition resulting from the consolidation. In addition to continued consolidation of hospitals across the country, the article suggests there is a growing trend of large hospital systems buying up doctors’ groups and medical practices. According to Richard Scheffler, Director of the Petris …

*Updated: October 10, 2018 On Wednesday, October 10, President Trump signed into law both bills passed by Congress to ban gag clauses in pharmacy contracts: the Patient Right to Know Drug Prices Act (S.2554) affects employer-sponsored and individual drug plans and the Know the Lowest Price Act (S.2553) will affect Medicare Part D and Medicare Advantage plans. Trump expects an immediate impact on drug prices and remarked at the signing: “All our citizens deserve to know the lowest price available at our pharmacies, and now that’s what they’ll be getting.”   *Updated: …

*Updated: September 27, 2018 On Tuesday, September 25, the House voted to pass the Patient Right to Know Drug Prices Act, so the bill currently awaits President Trump’s Signature. In addition, both the House and Senate passed the Know the Lowest Price Act of 2018 (S.2553), which bans gag-clauses in Medicare Advantage or Medicare Part D plans. In a tweet on September 17, President Trump expressed his support of legislation that will remove gag clauses. As a result, gag-clauses at pharmacy counters will likely be prohibited, so pharmacists will be …