President Trump was sworn into office on Monday, promising swift action on several fronts. There is already a new Federal Trade Commission (“FTC”) Chair, Andrew Ferguson, with former FTC Chair Lina Khan expected to step down shortly. At the Department of Justice, Antitrust Division (“DOJ”), proposed AAG Gail Slater will need to be confirmed by the Senate before she can take the helm.
Overall, our view is that antitrust enforcement in the new administration will be complicated. However, while the Biden administration has been criticized in some quarters for overreach in antitrust enforcement, there has been bipartisan consensus that certain industries, including Healthcare, have become too concentrated.
Healthcare Antitrust Enforcement Under Biden: Active to the Very End
The Biden administration’s FTC and DOJ were extraordinarily active in the healthcare space, not just bringing enforcement actions against various industry participants (some of which were brought on the literal last business day of the administration), but putting forth new guidance and rules, while withdrawing others. Some examples of the Biden administration’s healthcare-focused antitrust program included:
- Merger Enforcement: The Biden FTC and DOJ adopted a stringent approach toward healthcare mergers, challenging transactions that threatened to excessively consolidate market power. This included both horizontal mergers between direct competitors and vertical mergers involving companies at different stages of the supply chain. The agencies were less inclined to settle merger challenges with remedies, often opting to block transactions outright to preserve competition. The administration scrutinized the role of private equity in the healthcare industry, particularly concerning acquisitions that could lead to monopolistic practices.
- Conduct Investigations: The administration targeted anticompetitive practices in the healthcare and pharmaceutical industries, including “pay-for-delay” agreements and monopolistic behaviors that kept drug prices high. Notably, the FTC pursued investigations into pharmacy benefit managers (“PBMs”), examining their role in drug pricing and their potential conflicts of interest and releasing a staff interim report in the last few days of the outgoing Biden administration.
- Withdrawal of Antitrust Healthcare Policy Statements and other Guidance: The agencies withdrew longstanding healthcare-specific policy statements that provided firms with clear guidance, including explicit safe harbors, about how to engage in certain conduct and transactions in the healthcare industry without running afoul of the antitrust laws. The withdrawal of the policy statements has introduced uncertainty to companies operating in the healthcare space and left them vulnerable to antitrust scrutiny for practices that were previously expressly permitted.
What will Federal Healthcare Enforcement Look Like Now?
Although particular priorities may change between administrations, the prior Trump administration pursued robust antitrust enforcement in the healthcare industry, and there is every reason to believe that the new Trump administration will pick up where the prior one left off. Below, are three specific areas to watch in the new administration:
- More Guidance (Please)?: We are curious to see whether the old Healthcare Statements or Antitrust Guidelines for Collaborations Among Competitors (“Collaboration Guidelines”), which are highly relevant to the antitrust analysis of healthcare collaborations and joint ventures, are reinstated or new ones are introduced in this Trump administration. The two Republican FTC commissioners during the Biden administration, including the current new FTC Chair, Andrew Ferguson dissented from the prior decision to withdraw the Collaboration Guidelines and the decision was criticized by many conservative antitrust commentators. Although the healthcare industry will likely remain in the crosshairs for antitrust enforcement, a Trump administration will nonetheless likely be more business friendly and pragmatic in its approach to enforcement and reinstating guidance for industry participants would not be a surprising move for it to take.
- “Middlemen” Still the Bogeymen?: We anticipate that the Trump administration will continue investigations into the role of middlemen in the healthcare industry—particularly PBMs—begun under the Biden administration. Trump has previously criticized PBMs for their role in inflating drug prices, and we will likely see continued efforts to investigate these entities, though whether either agency will pursue more novel theories of antitrust harm remains to be seen.
- Merger Guidelines: Do they Stay or Do they Go (or Something in Between)?: As we have discussed in a previous post, the FTC and DOJ revised substantially the Merger Guidelines at the end of 2023, which is the substantive framework they use to evaluate whether they consider a proposed transaction to substantially lessen competition under Section 7 of the Clayton Act. While the new Guidelines have been in place for only a year, both Agencies have brought several successful litigations under them. Moreover, while they have been highly controversial, new FTC Chair Andrew Ferguson recently stated, “[o]n the question of, should they be rescinded, reformed, whatever, I don’t think they should be categorically rescinded. I don’t think we should get into a cycle where we are just rescinding guidelines every time the chairmanship changes hands. The guidelines will become useless to everyone if everyone thinks that they just embody the very particular preferences of a particular party.” But he noted in the same interview, “I am open to reforming them.”
CONCLUSION
Although we expect antitrust enforcement trends in healthcare to be broadly consistent between administrations, it is the differences that will be telling as we move forward into the Trump Presidency. And, even were the antitrust agencies to shift their priorities or approach under President Trump, that change would not affect the many states, like California, that have passed new healthcare-focused antitrust laws and implemented aggressive new enforcement regimes in recent years.