American Antitrust Institute Materials on Competition Issues in the Healthcare Supply Chain

The American Antitrust Institute has released a collection of materials on competition issues with respect to the health care supply chain.  The Press Release states: 

The current COVID-19 public health crisis highlights the critical competition, public policy, and security issues relating to the healthcare supply chain. At a time when some functions within the healthcare system are temporarily immunized from the antitrust laws, it is essential to emphasize the importance of vigorous antitrust oversight and the benefits of competition for the welfare of consumers, healthcare workers, and innovation.

AAI has produced legal, economic, and institutional analysis of healthcare competition issues for over two decades. This evidence-based analysis touches on all aspects of the supply chain, including the adverse effects of consolidation at the provider, insurer, and intermediary levels; the debate around bargaining power; and the importance of diversity and redundancy on the stability and safety of the supply chain.

Below is a sampling of key healthcare supply chain issues for which AAI has generated research, education, and advocacy to inform and engage the antitrust enforcement and competition policy communities. This body of work also serves in a vital role to inform longer term responses to the current public health crisis and to suggest the importance of a broader public policy framework for ensuring competition in this critical sector. Note: AAI resources on competition in the pharmaceutical sector can be located separately under “Health & Pharmaceuticals” section of our website.

The resources can be found, here. 

U.S. Army Receives Remdesivir at No Cost

Back in March, the U.S. Army signed a deal with Gilead Sciences to receive Remdesivir at no cost to treat Covid-19.  This is especially important given the recent study demonstrating Remdesivir as a potential effective treatment for Covid-19.  The Military Times discusses the deal as well as work on a vaccine which started in January, here.  

Novartis, the Good Samaritan

As discussed in a previous post, the Covid-19 pandemic is an excellent opportunity for the pharmaceutical industry to demonstrate its commitment to serving the world through philanthropy.  Novartis recently stated that it will “donate up to 130 million doses” of a generic drug which may be a good treatment for coronavirus.  The Press Release further outlines Novartis’ other efforts to combat Covid-19.  Notably, Gilead Sciences received a significant amount of criticism for its attempt to get a potential treatment for Covid-19 orphan status under U.S. law—which it has since withdrawn.  Professor Lisa Larrimore Ouellette has an excellent analysis of the situation, here.  The Novartis Press Release states, in part:

Basel, March 20, 2020 - Novartis announced today its commitment to donate up to 130 million doses of generic hydroxychloroquine to support the global COVID-19 pandemic response. Hydroxychloroquine and a related drug, chloroquine, are currently under evaluation in clinical trials for the treatment of COVID-19. Novartis is supporting ongoing clinical trial efforts, and will evaluate needs for additional clinical trials.

When supported for use in COVID-19 infected patients by regulatory authorities, Novartis intends to donate up to 130 million 200 mg doses by the end of May, including its current stock of 50 million 200 mg doses. The company is also exploring further scaling of capacity to increase supply and is committed to working with manufacturers around the world to meet global demand.

Novartis Sandoz division currently only holds a registration for hydroxychloroquine in the U.S., and will pursue appropriate regulatory authorizations from the U.S. FDA and the European Medicines Agency. Novartis will work with stakeholders including the World Health Organization to determine the best distribution of the medicine to ensure broad access to patients most in need of this medicine globally. The company aims to ensure that patients currently depending on this medicine are not impacted by the donation.

The commitment announced today builds on the previously announced commitments of a USD 20 million Novartis COVID-19 Response Fund, drug discovery collaboration efforts, support of clinical trials for existing Novartis medicines, and the Sandoz commitment to maintain stable prices on a basket of essential medicines that may help in the treatment of COVID-19.

Novartis intends to work closely with other manufacturers to scale up production of hydroxychloroquine as necessary to support global supply, and encourages industry, governments and international institutions to ensure adequate global supply of medications to treat COVID-19 patients.

US FTC and DOJ, Antitrust Division Modify Antitrust Procedures in Light of Coronavirus

The Federal Trade Commission and the U.S. Department of Justice, Antitrust Division have modified procedures for antitrust review and provided direction for businesses addressing the coronavirus.  The Press Release from the FTC states, in part: 

The Federal Trade Commission and the U.S. Department of Justice Antitrust Division today issued joint statement detailing an expedited antitrust procedure and providing guidance for collaborations of businesses working to protect the health and safety of Americans during the COVID-19 pandemic.

The expedited procedure notes, for example, that health care facilities may need to work together in providing resources and services to assist patients, consumers, and communities affected by the pandemic and its aftermath. Other businesses may need to temporarily combine production, distribution, or service networks to facilitate production and distribution of COVID-19-related supplies.

Under the expedited procedure for COVID-19 public health projects, the agencies will respond to all COVID-19-related requests, and resolve those addressing public health and safety, within seven calendar days of receiving all information necessary to vet these proposals. The statement sets out the instructions for businesses wishing to take advantage of this procedure.

The expedited COVID-19 procedure offers quicker review than existing FTC and Justice Department programs that are designed to provide guidance to businesses concerned about the legality of proposed conduct under the antitrust laws. The FTC’s “Staff Advisory Opinion” procedure and DOJ’s “Business Review Letter” procedure allow any firm, individual, or group of firms or individuals to submit a proposal to the agencies and to receive a statement advising whether the agencies would challenge the proposed activity under the antitrust laws.

“Under these extraordinary circumstances, we understand that businesses collaborating on public health initiatives may need an expedited response from U.S. antitrust authorities,” said FTC Chairman Joe Simons. “We are committed to doing everything we can to help with these efforts, while continuing to aggressively enforce the antitrust laws.”

“The Antitrust Division recognizes the importance of providing clarity expeditious clarity on any antitrust obligations in this challenging time,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Our expedited Business Review Letter procedure will help facilitate businesses that want to work quickly to address the urgent public health and economic needs associated with COVID 19.”

The antitrust laws accommodate procompetitive collaborations among competitors. In their joint statement, the FTC and the Department of Justice listed several types of collaborative activities designed to improve the health and safety response to the pandemic that would likely be consistent with the antitrust laws.

At the same time, the agencies also stressed that they will not hesitate to hold accountable those who try to use the pandemic to engage in antitrust violations. In addition, the Department of Justice will criminally prosecute conduct such as price-fixing, bid-rigging, or market allocation.

The expedited procedure requires that an applicant provide the FTC or Justice Department a written description of the proposal, including the parties that would be involved in the effort or activity, and the name and contact information of a person from whom the agencies could obtain additional information. This expedited procedure is for use solely for coronavirus-related public health efforts and may be invoked at the option of the requestor, in lieu of the agencies’ standard procedures for handling requests for advice.

The agencies also committed to expedite requests under the National Cooperative Research and Production Act for flexible treatment of certain standard development organizations and joint ventures. 

The statement also notes that the FTC and the Justice Department are addressing actions by individuals and businesses to take advantage of COVID-19 through other fraudulent and illegal schemes. Anyone with information or concerns about this sort of conduct, or other COVID-19-related complaints, should contact the FTC’s Consumer Response Center at 1-877-382-4357 or the National Center for Disaster Fraud Hotline (1-866-720-5721) or e-mail (disaster@leo.gov). More information on the FTC’s guidance on potential fraud, deceptive practices, and scams is available here, and to report a complaint go to www.ftc.gov/complaint.