As sectors such the health care and pharmaceutical industries evolve, antitrust compliance and enforcement measures are also adapting and even growing in different ways. Executives and boards will find it useful to identify various trends in this area, which will help them ensure that their companies are complying with new antitrust requirements. This is especially critical for CEOs, GCs, and Chief Compliance Officers as they must keep pace with the continued expansion that is becoming characteristic of antitrust enforcement laws.
New Directions and Emerging Trends in Antitrust Law
In a recent webinar, panelists discussed antitrust compliance issues and identified emerging antitrust trends for CEOs, GCs, and other decision makers to be aware of. These include:
- Increased legal battles revolving around intellectual property
- Closer scrutiny of hospital contracts and pharmaceutical products, where manufacturers attempt to delay the release of certain generics, such as in In re Flonase Antitrust Litigation
- “Most-favored nation” (MFN) language and clauses in contracts (also known as “competitor parity” clauses); enforcers are now tending to view these as anti-competition in nature
Thus, antitrust laws and enforcement measures are definitely outgrowing their association with early 1900s monopolies. Antitrust laws now dip deep into the crevices and internal mechanisms for many industries, including negotiating activities and contract-making endeavors.
Increased DOJ Antitrust Enforcement Activity in the Health Care Industry
Aside from these identified trends, there is a marked increase in DOJ activity when it comes to antitrust enforcement in the health care industry. In particular, we are seeing an extension of antitrust liability even down into individual activity (whereas previous antitrust regulation tended to focus on corporate operations). Specifically, the Yates Memorandum has been highly influential in shifting the focus to individual accountability. Thus, aside from broader issues like mergers and acquisition activity, antitrust compliance is now encompassing more specific practices as well.
While efforts by the DOJ to hold individuals accountable for antitrust violations are not new, it is clear that the Department is revamping their stance and creating a more aggressive approach to antitrust enforcement. For instance, their increased efforts include:
- Adopting new internal procedures to help identify potentially culpable individuals earlier, thus minimizing risks associated with time bars and evidence
- More comprehensive reviews of company organizational structures to ensure proper identification of all senior executives who potentially condoned, directed, or participated in the violations
- Expanding the scope of enforcement to include conduct such as price fixing, market allocation, and other activity that has previously been regarded as being in the realm of corporate functions
Lastly, under the new enforcement approach, antitrust liability may even be associated with individuals who are not communicating or interacting regularly with compliance departments.
Implications for CEOs, GCs, and Other Executives
In light of this increased scope, a focus on antitrust compliance is imperative for CEOs, GCs, and other executives. These issues need to be at the forefront of discussion when making important corporate decisions and adjustments. Also, an emphasis on compliance needs to be built into the training process for new CEOs and GCs.
For instance, executive training should highlight:
- The importance of CEOs and GCs in participating actively in organizational compliance
- Regular reminders of broad issues, such as issuing antitrust materials in emails or newsletters
- Greater collaboration between between antitrust and regulatory lawyers when counseling corporate clients
In particular, the GC should work closely with the chief compliance officer and other committee members to ensure that company compliance policies include recent, emerging antitrust law developments. Lastly, the company as a whole should have a direct interest in preventing investigations; even if the investigation does not ultimately lead to liability, document preservation and other sound compliance processes could minimize the overall amount of resources expended in defending.
Antitrust measures are essential to healthy competition and consumer choice, especially in rapidly changing industries such as health care. Free-flowing competition can help consumers to have the benefits of more choices and better quality products/services.
However, this means that companies need to incorporate measures that account for these enforcement changes in order to avoid legal disputes and time-consuming investigations. If you have any questions or concerns involving the most recent changes in antitrust regulation and enforcement, contact us at Kessler Topaz. Our team of attorneys is dedicated to helping our clients prevent violations, litigate claims, and ensure that compliance remains a top priority for their organizations.