Lei­bowitz talks about patent agree­ments, an­titrust en­force­ment

Lei­bowitz talks of chal­leng­ing patent agree­ments, role of an­titrust en­force­ment

Modern Healthcare - - NEWS - Joe Carl­son

Jon Lei­bowitz is leav­ing his post this week as chair­man of the Fed­eral Trade Com­mis­sion af­ter pre­sid­ing over a pe­riod of in­tense scru­tiny of the health­care in­dus­try.

Lei­bowitz, 54, was ap­pointed as one of the bi­par­ti­san com­mis­sion’s Demo­cratic mem­bers in 2004 and then was el­e­vated to chair­man in the early months of the Obama ad­min­is­tra­tion.

Since then, he has ag­gres­sively pur­sued the com­mis­sion’s ef­forts to chal­lenge pay-for-de­lay patent agree­ments in patent lit­i­ga­tion, which keep generic com­peti­tors off the mar­ket. One of those cases, FTC v.

Joe Carl­son: Why are you step­ping down now, and what is next for you? Jon Lei­bowitz:

I don’t know what is next for me, but I have been in government for 21 out of the last 25 years, and it is time, I think, for me and for my fam­ily—I have two teenage daugh­ters who will be go­ing to col­lege soon—to think about do­ing some­thing else. Th­ese jobs are ex­hil­a­rat­ing, but they are also ex­haust­ing.

Carl­son: Tell me about your thoughts on the role of health­care in the Fed­eral Trade Com­mis­sion’s ac­tiv­i­ties and the promi­nence of health­care, and what kind of record are you leav­ing in terms of health­care vic­to­ries and losses? Lei­bowitz:

Some of that we will find out in the next six months or so, but I would say this: As you know, our com­mis­sion is very con­sen­sus-driven, and we try to take the great­est good for the great­est num­ber of peo­ple ap­proach. Health­care in the United States is about 18% of the GDP. That is un­sus­tain­able and it is un­ac­cept­able. In Europe, where the health­care is roughly or al­most as good, they spend about 7% or 8% of their GDP, maybe up to 10%. And we are big be­liev­ers here that the more com­pe­ti­tion you have, the more prices go down and choices go up.

Carl­son: Do prices in health­care ac­tu­ally go down? Lei­bowitz:

Yes, they do go down. I think when you gen­er­ally have more com­pe­ti­tion, prices do go down. For ex­am­ple, one of our sig­nal is­sues is what we call “pay for de­lay” phar­ma­ceu­ti­cal pay­ments, re­verse pay­ments

Wat­son Phar­ma­ceu­ti­cals, is sched­uled for oral ar­gu­ments be­fore the U.S. Supreme Court on March 25.

Also dur­ing his four years as chair­man, the panel has ap­proved sev­eral chal­lenges to hospi­tal merg­ers and ac­qui­si­tions and reg­is­tered its first vic­to­ries in fed­eral courts in hospi­tal cases since early 1990s.

Mod­ern Health­care le­gal af­fairs re­porter Joe Carl­son in­ter­viewed Lei­bowitz about his ten­ure and the role of an­titrust en­force­ment in fos­ter­ing qual­ity and ef­fi­ciency in health­care. where brand phar­ma­ceu­ti­cal com­pa­nies put—fig­u­ra­tively—a big bag of cash on the ta­ble, and in th­ese sweet­heart deals the generic takes the money in ex­change for not en­ter­ing the mar­ket, and it is win-win for the com­pa­nies, but lose-lose for con­sumers. If we are for­tu­nate enough to win our case be­fore the Supreme Court, we will save con­sumers bil­lions of dol­lars a year.

Carl­son: How can the FTC step­ping in to block a merger be­tween two hos­pi­tals that op­er­ate in the same com­mu­nity lower prices? Lei­bowitz:

Ob­vi­ously, we let many, many hospi­tal merg­ers go through be­cause they are not anti-com­pet­i­tive, but in the last sev­eral years, I think we have chal­lenged four hospi­tal merg­ers. We have won two pre­lim­i­nary in­junc­tions. One is on ap­peal in the 6th Cir­cuit and one is at the Supreme Court. But let me give you a hy­po­thet­i­cal. If there are two hos­pi­tals and they are pro­vid­ing com­pet­i­tive ser­vices and they merge, it might very well be that they start rais­ing the price to pay­ers, to in­sur­ers, and those costs are passed on to busi­nesses and they are passed on to con­sumers and they are passed on to the fed­eral government, by the way, which runs Medi­care as well as a va­ri­ety of other health­care pro­grams.

Carl­son: So, in that health­care- provider arena, it is really more about stop­ping an in­crease in price rather than driv­ing prices back­ward. Lei­bowitz:

I think that is a fair point. Un­der one of my pre­de­ces­sors, Tim Muris, we did a ret­ro­spec­tive of hospi­tal merg­ers. When they looked at some con­sum­mated hospi­tal merg­ers, in­clud­ing one in­volv­ing Evanston (Ill.) North­west­ern Hospi­tal, that con­sum­mated hospi­tal merger ac­tu­ally in­creased costs to the pay­ers two and three

times what they had been paying be­fore. And in that in­stance, we did ac­tu­ally bring a case—that was when I was a non­chair com­mis­sioner—and the staff’s com­plaint was sus­tained (Aug. 13, 2007, p. 6).

Carl­son: What is the No. 1 way that a hospi­tal or any health­care provider can get it­self in trou­ble in terms of an­titrust? Lei­bowitz:

I worked for a trade as­so­ci­a­tion (the Mo­tion Pic­ture As­so­ci­a­tion of Amer­ica from 2000 to 2004), and an­titrust com­pli­ance was very dif­fi­cult even though some of the things that the com­pli­ance of­fi­cers wanted the trade as­so­ci­a­tion not to do weren’t prob­lem­atic at all. Hav­ing said that, I think if they use good judg­ment, hospi­tal ad­min­is­tra­tors—and they don’t con­spire to set prices with their com­peti­tors—they will be on the right side of the law. And of course, the other thing is if they are do­ing some­thing that they are not cer­tain of they can al­ways call us up and we can tell them whether they are per­mit­ted to do that or not.

Carl­son: Some­thing I hear from providers whose merg­ers that have been blocked or chal­lenged is that they are try­ing to fol­low the guide­lines in the health­care re­form law, which dic­tates ac­count­able care, care co­or­di­na­tion. Are those goals in the re­form law com­pat­i­ble with the an­titrust laws as they ex­ist to­day? Lei­bowitz:

I think they are. I mean, it is a great ques­tion. And again, the vast ma­jor­ity of health­care providers, they fol­low the law. But yes, I think that cer­tainly in broad­brush strokes the goals of the an­titrust laws, which are es­sen­tially en­sur­ing that com­pe­ti­tion brings down prices and give con­sumers more choice, are also con­sis­tent with the Af­ford­able Care Act, which is also try­ing to re­strain the dra­matic growth in med­i­cal costs. We work very closely with the Jus­tice De­part­ment and HHS and CMS to try to come up with an ap­proach that really takes a very light touch with re­spect to ACOs. We like to see, I think as an agency, ex­per­i­men­ta­tion to re­duce health­care costs. And we also rec­og­nize that, as you know, the health­care in­dus­try is a mar­ket that is a com­bi­na­tion of a free mar­ket and also reg­u­la­tions. We are just try­ing to see whether ac­count­able care or­ga­ni­za­tions can work to re­duce prices. If they do, I think you will see more of it and we will be very pleased.

Ed­i­tor’s note: Ques­tions and an­swers were edited for clar­ity and length.


Lei­bowitz, who is step­ping down as FTC chair­man this week, was a com­mis­sioner for more than four years be­fore be­ing ap­pointed chair­man in 2009.

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