Antitrust Health Care April 2018 Chronicle Vol. 32 / No. 3 In This Issue Editor’s Report E ective Advocacy Before FTC on Welcome to the third issue of the Chronicle for the ABA 2017-18 term. Health Care Deals In this issue, we are pleased to present an interview with Alexis Gilman, Interview with Alexis Gilman, former Assistant Director for Mergers IV at the Federal Trade Commission former Assistant Director for and current Partner at Crowell & Moring LLP. Chronicle editor Amanda Mergers IV at the Federal Trade Hamilton interviewed Gilman about best practices for advocating Commission and current Partner before the FTC on health care deals. Our second article discusses the at Crowell & Moring, by Chronicle implications of increased government focus on branded drug companies’ editor Amanda Hamilton, Associate refusals to sell samples of drugs subject to REMS programs to generic at Haug Partners fi rms and other forms of alleged REMS abuse. The third article provides a summary of recent congressional hearing activity related to antitrust issues in the health care sector. The FDA’s and FTC’s Increased Focus If there is a topic that you would like to see covered in a Committee program or if you have any other suggestions, please contact the on Generic Drug Committee Co-Chairs, Seth Silber ([email protected]) or Leigh Oliver Competition Signals ([email protected]). Enhanced Attention If you would like to submit an article for the Chronicle, please contact to REMS Issues Amanda Lewis ([email protected]) or Anthony Swisher (Anthony.Swisher@ Heather Choi, William Lavery and squirepb.com). Michael Perry, Partners, and Jana Seidl, Associate, at Baker Botts L.L.P. Executive Editors Editors Competition Amanda G. Lewis Lauren Battaglia in Health Care: Federal Trade Commission Hogan Lovells Summary of Recent Washington, D.C. Washington, D.C. Congressional Anthony W. Swisher Amanda Hamilton Hearings Squire Patton Boggs Haug Partners Liam E. Phibbs, a Law Clerk at Washington, D.C. Washington, D.C. Hogan Lovells US LLP Daniel Dukki Moon Linklaters New York, NY James Moore, III Skadden, Arps, Slate, Meagher & Flom Washington, D.C. A Publication of the Health Care and Pharmaceuticals Committee of the Antitrust Section of the American Bar Association, Co-Chaired by Seth Silber of Wilson Sonsini and Leigh Oliver of Hogan Lovells. April 2018 Antitrust Health Care Chronicle 2 Effective advocacy before ftc on health care deals Alexis Gilman, a partner at Crowell & Moring LLP and former Assistant Director (AD) at the Federal Trade Commission, was interviewed by Amanda Hamilton, Chronicle editor and Associate at Haug Partners, LLP. From 2014 to 2017, Mr. Gilman served as the AD of the Mergers IV Division (Mergers IV) in the Bureau of Competition of the Federal Trade Commission. As AD, Mr. Gilman oversaw merger investigations and litigations across various industries, including hospitals and other health care providers, distribution services, supermarkets, funeral homes, casinos and online gaming, retail, and consumer goods. In the interview, Mr. Gilman provides insights into Mergers IV’s review process for health care mergers, the types of claims and evidence that the agency fi nds persuasive, and other tips for eff ective advocacy before the agency. The Chronicle: What should one arguments forward to the staff as expect in terms of process when early as possible. Rather than leaving Mergers IV reviews a health care deal? the staff to form conclusions about unhelpful facts, it’s often better to Mr. Gilman: For mergers that raise provide the staff with context, the potential concerns, the staff will parties’ views on those facts, and the typically send each of the merging reason why those facts aren’t fatal parties a voluntary access letter. for your deal. At the very least, doing Access letters in a health care so could let you know sooner rather provider deal typically ask for, among than later what the staff thinks of Alexis Gilman other things, contact information those facts, your arguments, and the Crowell & Moring LLP for the parties’ top health plans deal overall. Finally, and relatedly, (based on reimbursement); strategic I think another best practice is to and business plans; documents engage with the staff frequently and discussing competition and market ask lots of questions about where shares; information about the they are in their analysis, what parties’ service areas; annual unresolved questions or concerns discharge and revenue data; and they have, and what information information about the parties’ would be helpful to answer those effi ciencies claims and post-merger questions and concerns. plans. Third-party health plans and competing providers can expect a The Chronicle: Does your advice diff er request by Mergers IV staff for an based on the type of merger? interview so that the staff can learn more about the merging parties, the Mr. Gilman: Each deal is diff erent, services they and their competitors so each deal could call for a diff erent provide, and the geographic area approach, but as a general rule, I they serve; understand the health don’t think it matters signifi cantly if plan’s contract negotiations with it’s a horizontal merger or a vertical the merging parties and its provider merger. If a deal raises concerns, the network in the area; and solicit views best practices for advocating for your about the merger. client and working with the staff in a horizontal deal are likely to apply The Chronicle: Generally, what are equally in a vertical deal. some best practices for advocating before Mergers IV in support of health The Chronicle: Alternatively, what are care mergers? some bad, unhelpful, or unproductive practices that you recommend against Mr. Gilman: The most obvious engaging in? best practice is to maintain your credibility with the agency. Another Mr. Gilman: These are really the best practice is to deal with diffi cult opposite of the best practices. facts up front, putting your best Exaggerating or withholding April 2018 Antitrust Health Care Chronicle 3 information is usually not a letter, particularly on substantive for an alternative purchaser when successful strategy because the issues that are likely to be key in making a failing-fi rm defense. For staff almost always gets to the the staff ’s analysis, whether it be geographic market, the best sources bottom of the facts. So taking that geographic market, competitive for how the FTC looks at geographic kind of approach may diminish eff ects, failing fi rm, etc. The staff will market defi nition are the Advocate/ your credibility, lose your client the certainly want to try to get at least NorthShore and Penn State Hershey/ benefi t of the doubt on the margin, a rough cut of market shares and Pinnacle opinions and the FTC’s and perhaps even slow down the try to do diversion-ratio analysis, so briefs in those cases. For effi ciencies, staff ’s review if they have to triple the parties should be prepared to the district court’s decision in St. check all the representations that provide or address that type of data Luke’s/Saltzer is notable because counsel is making. Additionally, analysis. Even if counsel decide not it recognized, even commended, not engaging with the staff for long to affi rmatively present some of this the parties’ eff orts to move from stretches, either generally or with information, counsel should at least fee-for-service to value-based care respect to the unhelpful facts in know what those documents and and achieve other effi ciencies, but your case, is usually not a productive data say. If the staff determines that ultimately said those arguments practice. Again, the staff will work they need to conduct a more in- didn’t save the merger. to fi gure things out and they might depth review, they may want to get Unfortunately for health care reach conclusions that are less detailed discharge data (patient-level providers looking to merge (at least favorable to the client, so counsel information, including age, gender, with a close competitor), those should take their best shot at taking diagnosis, and length of stay, for cases can seem pretty grim. So I on bad facts and engaging with staff each inpatient discharged from a would point to the Statements of on a regular basis. hospital). If the parties have these Antitrust Enforcement Policy in data available to provide to the staff Health Care and the Enforcement The Chronicle: Are there any upon request, that can expedite the Policy Statement Regarding misconceptions about practicing in process because, otherwise, the staff Accountable Care Organizations front of Mergers IV or the FTC that you may need to get these data from the as agency guidance that speaks to would like to correct? state, which can take time. certain mergers, collaborations, and arrangements that raise relatively Mr. Gilman: One potential The Chronicle: Are there any publicly little antitrust risk and that provide misconception is that agency lawyers available sources of information that antitrust safe harbors. Finally, I are always looking to go to court to provide insight into how Mergers IV or would note that over the last decade, block a merger. While the FTC, and the FTC evaluates health care deals? only about 1% of hospital mergers Mergers IV in particular, has been in have been challenged—and the court a lot in the past several years, Mr. Gilman: The Horizontal Merger agency hasn’t challenged any purely what’s harder to see and track are Guidelines are the foundation vertical provider mergers to date— all the investigations that the staff for the staff ’s general analytical so odds are still in your favor if you closes—including some mergers approach, so that’s a good place are a health care provider looking to that are very close calls.