Antitrust Overview
| Date | 01 February 2010 |
CHAPTER
I
ANTITRUST
OVERVIEW
A.
Application
of
the
Antitrust
Laws
to
Health
Care
The
health
care
sector
comprises
numerous
industries
providing
a
broad
array
of
products
and
services,
including
medical
care
by
licensed
physicians
and
other
health
care
professionals,
inpatient
and
outpatient
services
of
hospitals
and
other
facilities,
prescription
drugs,
durable
medical
equipment,
home
health
services,
and
a
variety
of
arrangements
for
delivering
and
paying
for
health
care
services,
ranging
from
traditional
indemnity
insurance
to
health
maintenance
organizations
(HMOs).
These
varied
products
and services
are
delivered
to
consumers
by
health
care
providers
and
payors
through
a
complex
web
of
contractual
and
regulatory
relationships.
Until
the
late
1970s,
antitrust
cases
in
the
health-care
sector
were
rare.
For
many
years
after
passage
of
the
Sherman
Act,
the
practice
of
medicine
was
considered
a
“learned
profession,”
rather
than
“trade
or
commerce,”
and
thus
it
was
debatable
whether
the
antitrust
laws
applied
to
it.'
In
addition,
the
delivery
of
health
care
is
often
a
local
activity,
and
thus
it
was
questionable
whether
rendering
of
health
care
services
affected
interstate
commerce
sufficientiy
for
courts
to
have
subject
matter
jurisdiction
over
cases
brought
under
the
federal
antitrust
laws.
The
U.S.
Supreme
Court
issued
important
decisions
in
1975
and
1976
settling
these
issues.
In
its
1975
decision
m
Goldfarb
v.
Virginia
State
Bar,
the
Court
held
that
there
is
no
“learned
professions”
exemption
from
antitrust
coverage,
although
it
also
noted
that
there
may
be
differences
in
antitrust
treatment
between
the
activities
of
professions
and
other
occupations.
The
next
year,
the
Court
decided
Hospital
1.
See,
e.g.,
Goldfarb
v.
Va.
State
Bar,
773,
786
n.15
(1975)
{noting
that
“until
the
present
case
it
is
clear
that
we
have
not
atternpted
to
decide
whether
the
practice
of
a
learned
profession
falis
within
§
|
of
the
Sherman
Act”);
FTC
v.
Raladam
Co.,
643,
653
(1931)
(noting
that
medical
practitioners
“follow
a
profession
and
not
a
trade”).
But
cf’
Am,
Med.
Ass’n
v.
United
States,
U.S. 519,
528-29
(1943)
(suggesting
that
antitrust
laws
apply
to
activities
of
physicians).
2.
(1975).
3.
id,
at
788
n.17:
6
Antitrust
Health
Care
Handbook
Building
Co.
y,
Trustees
of
Rex
Hospital,*
in
which
it
explained
that
the
activities
of
a
local
hospital
might
affect
interstate
commerce
sufficiently
to
fall
within
the
purview
of
federal
antitrust
law.”
In
succeeding
years,
the
Supreme
Court
issued
other
important
decisions
establishing
the
federal
antitrust
laws’
broad application
to
health
care.®
Now,
antitrust
LA
The
fact
that
a
restraint
operates
upon
a
profession
as
distinguished
from
a
business
is,
of
course,
relevant
in
determining
whether
that
particular
restraint
violates
the
Sherman
Act.
It
would
be
unrealistic
to
view
the
practice
of
professions
as
interchangeable
with
other
business
activities,
and
automatically
to
apply
to
the
professions
antitrust
concepts
which
originated
in
other
areas.
The
public
service
aspect,
and
other
features
of
the
professions,
may
require
that
a
particular
practice,
which
could
properly
be
viewed
as
a
violation
of
the
Sherman
Act
in
another
context,
be
treated
differently.
738 (1976).
fd.
at
744.
See
Cal.
Dental
Ass’n
v.
FTC,
526
U.S.
756
(1999)
(discussing
application
of the
“quick
look”
rule
of
reason
in
the
context
of
a
professional
association’s
restraints
on
advertising);
Summit
Health
v.
Pinhas,
(1991)
(discussing
the
interstate
commerce
requirement
in
the
context
of
a
hospital
staff-privilege
exclusion
decision);
Patrick
v.
Burget,
(1988)
(discussing
the
state
action
exemption
in
the
context
of
a
hospital
staff
privilege
peer
review
proceeding);
FTC
v.
Ind.
Fed’n
of
Dentists,
(1986)
{discussing
application
of the
nile
of
reason
in
the
context
of
a
concerted
provider
effort
to
thwart
cost
containment
by
payors);
Jefferson
Parish
Hosp.
Dist.
No.
2
v.
Hyde,
466
U.S.
2
(1984)
(discussing
tying
arrangements
in
the
context
of
an
exclusive
hospital
physician
contract);
Arizona
v.
Maricopa
County
Med.
Soc’y,
(1982)
(discussing
horizontal
price
fixing
in
the
context
of
a
physician
contracting
network);
Am.
Med.
Ass’n
v.
FTC,
(1982)
{affirmance
by
equally
divided
court)
(discussing
ethical
provisions
affecting
advertising
and
solicitation
of
patients
and
modes
of
practice
by
physicians);
Union Labor
Life
Ins.
Co.
v.
Pireno,
458
U.S.
119
(1982)
(discussing
the
McCarran-Ferguson
Act
exemption
for
the
business
of
insurance
in
the
context
of
a
fee
peer-review
program);
Nat’]
Gerimedical
Hosp.
&
Gerontology
Ctr.
v.
Blue
Cross
of
Kansas
City,
(1981)
(discussing
the
implied
repeal
doctrine
in
the
context
of
health
planning);
Group
Life
&
Health
Ins.
Co.
v.
Royal
Drug
Co.,
(1979)
(discussing
the
McCarran-Ferguson
Act
exemption
for
the
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