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The Latest: New DOJ Antitrust Division Policy Makes Compliance Programs More Critical than Ever

What Happened:

  • Last week, the Antitrust Division reported that it has changed its Justice Manual to state that it will consider antitrust compliance at the charging stage in criminal antitrust investigations, instead of waiting for plea negotiation or the sentencing stage.
  • Previously, the Antitrust Division had granted leniency only to the first whistleblower to come completely clean. Under the Antitrust Division’s policy reversal, this is no longer the only way to gain credit with the Antitrust Division, and the Antitrust Division will now consider if the Company has “robust” compliance programs when determining whether to bring charges.
  • With the announcement this past Thursday, the Antitrust Division published a guidance document that focuses on evaluating compliance programs in criminal antitrust investigations. This is the first time the Antitrust Division has published guidance on evaluating compliance programs in the context of criminal antitrust violations, and companies can now use this document to determine whether their compliance programs are in line with the Antitrust Division’s standards.
  • The Antitrust Division lists certain factors that Antitrust Division prosecutors should consider when evaluating the effectiveness of an antitrust compliance program. These are:
    1. The design and comprehensiveness of the program
    2. The culture of compliance within the company
    3. Responsibility for, and resources dedicated to, antitrust compliance
    4. Antitrust risk assessment techniques
    5. Compliance training and communication to employees
    6. Monitoring and auditing techniques, including continued review, evaluation and revision of the antitrust compliance program
    7. Reporting mechanisms
    8. Compliance incentives and discipline
    9. Remediation methods
  • In general, when analyzing a program, the Antitrust Division will ask whether the compliance program is well designed, whether it is being applied earnestly and in good faith, and whether it works.
  • Finally, the Antitrust Division also revised sections of its Manual on the processes for recommending indictments, plea agreements and selecting compliance monitors.


THE LATEST: FTC to Look Closely at Competition between Biologics and Biosimilars and Patent Protection Strategies of Branded Manufacturers


On July 18, 2018, US Food and Drug Administration (FDA) Commissioner Scott Gottlieb delivered a speech at The Brookings Institution in Washington, DC, discussing how to bolster competition from biosimilars while maintaining innovation.

The Commissioner noted the absence of true competition among biologics from biosimilar products in the United States, similarly to what the country experienced 30 years ago with respect to generics. The Commissioner said that this situation is caused, in part, by what he views as anticompetitive practices implemented by branded manufacturers, such as:

  • Rebating schemes in which drug manufacturers bundle discounts to health insurers and employers across different pharmaceutical products;
  • Multi-year contracts granting important rebates to payors, often entered into right before the entry of a biosimilar on the market;
  • Volume-based rebates;
  • Tying rebates, i.e., when rebates are offered if a product is bought together with a biologic;
  • Patent thickets, i.e., when branded manufacturers’ own dense portfolios of overlapping intellectual property rights cover biologics; and
  • Bundling biologics with other products, i.e., when a product is sold together with a biologic.


FTC Comment: Minnesota Law Requiring Public Disclosure of Health Care Contract Data Increases Risk of Anticompetitive Behavior

On June 29, 2015, the Federal Trade Commission (FTC) responded to a request for comment from two Minnesota state legislators concerning recently enacted amendments to the Minnesota Government Data Practices Act (MGDPA). Under the amendments, the MGDPA would be expanded to cover all data collected by health maintenance organizations, health plans, and other health services vendors that contract with the state to provide health care services to Minnesota residents. In practice, this means that the confidential terms and conditions of health plans’ contracts with health care providers could be subject to public disclosure.

While they commended the “laudable goals” of the MGDPA, the FTC ultimately concluded that the amendments could lead to the disclosure of competitively sensitive information and, therefore, increase the likelihood of anticompetitive behavior. Specifically, there were two major concerns raised in the FTC comment.

First, the amendments likely would lead to the exchange of fees, discounts and other pricing terms among providers, which would increase the likelihood of provider collusion. The comment notes that in markets with a relatively small number of competitors and where those competitors have the ability to accurately monitor each other’s transactions, there is increased risk of collusion.

The second concern is that the exchange of information among providers could impede the ability of health plans to selectively contract among providers. In a typical selective contracting environment “where health care providers do not know each other’s prices, providers are more likely to bid aggressively—offering lower prices—to ensure they are not excluded from selective networks.” If providers know the prices, rebates, and discount arrangements offered by their competitors, they possess a new tool in negotiations with health plans and are less likely to bid aggressively.

The FTC argued that a balance is needed between providing consumers with the information they need to make informed decisions concerning their health care and allowing competitors to share information that could facilitate anticompetitive behavior. The FTC encouraged the Minnesota legislature to consider the types of information that would be the most helpful for consumers in selecting their service, such as actual or predicted out-of-pocket expenses, co-pays, and quality comparisons of plans and providers. However, they urged caution in mandating public disclosure of health plan contract details and fee schedules.

While the FTC’s comment was addressed to legislators, it highlights the kinds of information exchanges that the antitrust regulators believe can lead to anticompetitive behavior in the health care industry. In that sense it builds on the joint FTC and U.S. Department of Justice Statements of Enforcement Policy in Health Care, originally published in 1996. Providers should avoid exchange of any information concerning their fees, discounts and other pricing arrangements with their competitors.

To see the full letter from the FTC, please click here.

European Commission Dawn Raids: EU General Court Reins in “Fishing Expeditions”

by Philip Bentley, QC and Philipp Werner

On 14 November, the EU General Court ruled in related cases T-135/09 and T-140/09 that the European Commission had been too broad when setting out its mandate for the carrying out of dawn raids at the offices of companies in France and Italy.  The Court viewed that the Commission was illegally “fishing” for evidence of possible further anti-competitive activity.  In essence, this means that the Commission must confine itself to a specific, targeted sub category when authorising dawn raids.

To read the full article, click here.

Private Actions in Competition Law: UK Government Consultation

by Philipp Werner, David Henry and Andrea Hamilton

On April 24, 2012, the UK government took a significant step towards private antitrust actions by publishing a consultation document on how best to encourage private sector challenges to anticompetitive behavior. This consultation must be seen in the broader context of efforts to develop private antitrust enforcement in the European Union. The UK has already established itself as a premier venue for private antitrust actions, and the case law on jurisdiction, privilege and access to leniency documents in follow-on actions is rapidly evolving.

The UK government envisages that new, more effective, measures are to be introduced as a complement to public antitrust enforcement by the UK Office of Fair Trading and the European Commission. In particular, the UK Government is consulting on a host of measures the most salient of which are the following:

  • Establish the Competition Appeal Tribunal as the "go to" venue for antitrust actions in the UK;
  • Introduce an opt-out collective actions regime;
  • Promote Alternative Dispute Resolution;
  • Measures to ensure that private actions effectively complement public enforcement.

The consultation runs until July 24, 2012.  A copy of the consultation is available here





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