FTC sues Surescripts, charging anticompetitive actions in e-prescribing

Commission contends the health IT vendor used illegal restraints to maintain its monopolies.

The Federal Trade Commission has filed a complaint in federal court against Surescripts, alleging that the health IT vendor has engaged in a “long-running anticompetitive scheme” to maintain its monopolies.

Specifically, the FTC contends that the company engaged in “illegal monopolization” of two electronic prescribing markets—routing and eligibility.

“Routing is the transmission of prescription and prescription-related information from a prescriber (via the prescriber’s electronic health record system) to a pharmacy,” states the FTC’s complaint. “Eligibility is the transmission of a patient’s formulary and benefit information from a payer (usually the patient’s pharmacy benefit manager) to a prescriber’s EHR.”

In its complaint, the FTC alleges that Surescripts purposely intended to prevent e-prescription routing and eligibility customers on both sides of each market from using additional platforms—a practice known as multihoming—using anticompetitive exclusivity agreements, threats and other exclusionary tactics.

“Surescripts has engaged in a long-running campaign of threats and other non-merits based competition to ensure that no other competitor could get a toehold in either market,” according to the FTC complaint. “As one example, when Allscripts, a large EHR customer of Surescripts, attempted to enter into a non-exclusive agreement with Surescripts in 2014 so Allscripts could use Emdeon, Surescripts launched a series of threats—what senior Surescripts executives called their ‘nuclear missiles.’ ”

As a result of these types of anticompetitive actions, the FTC contends that “decade-long monopolies” in the e-prescribing routing and eligibility markets have produced higher prices, reduced quality, stifled innovation, suppressed output and stymied alternative business models.

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“For the past decade, Surescripts has used a series of anticompetitive contracts throughout the e-prescribing industry to eliminate competition and keep out competitors,” said Bruce Hoffman, director of the Bureau of Competition at the FTC, in a written statement. “Surescripts’s illegal contracts denied customers and, ultimately, patients, the benefits of competition—including lower prices, increased output, thriving innovation, higher quality and more customer choice. Through this litigation, we hope to eliminate the anticompetitive conduct, open the relevant markets to competition and redress the harm that Surescripts’s conduct has caused.”

Surescripts CEO Tom Skelton issued a written statement, noting that the company is “very disappointed” at the allegations in the FTC’s complaint.

“For more than 18 years, we have operated fairly in an innovative and dynamic marketplace to increase patient safety, lower costs and ensure quality healthcare,” said Skelton. “Surescripts pioneered the use of two-sided networks that enable the safe and secure exchange of patient health information. Since 2009, Surescripts has reduced the cost of electronic prescribing by 70 percent. And since 2016, we have driven a 64 percent improvement in the accuracy of the more than 5 million electronic prescriptions we process each day.”

At the same time, Skelton added that Surescripts is “making an important change” to its e-prescribing business agreements with pharmacies by removing the loyalty provisions in those contracts.

“This step addresses one of the FTC’s chief concerns while reflecting the current dynamics of the healthcare industry and the state of electronic prescribing today,” he concluded. “Surescripts has been cooperating with the FTC throughout its investigation, and we remain focused on meeting our customers’ needs. We take seriously our role in helping medical professionals better serve patients, who are the ultimate beneficiaries of our nationwide health information network.”

The day before the FTC action, Surescripts released its 2018 National Progress Report, contending that “interoperability is occurring at scale and driving measurable improvements in healthcare quality and cost for patients and providers.” Its nationwide health information network processed 17.7 billion secure health data transactions last year—a 29 percent increase over 2017—among 1.61 million healthcare professionals.

The company’s report also says it “added 8 million unique patients to its master patient index, which now includes 258 million patients, or nearly 80 percent of the total U.S. population and 93 percent of all insured patients.”

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