Antitrust laws are regulatory mechanisms designed to
assure a competitive marketplace, not to protect the competitor, however
big, small, good, or bad. Congress believes marketplace competition
produces lower prices and better goods and services. There are federal and state antitrust laws. In Iowa,
the bulk of antitrust action is brought in federal court under federal
antitrust laws. Government regulators have made it clear physician behaviors are subject to antitrust scrutiny.
Federal Antitrust Laws
Section 1 of the Sherman Act, prohibiting concerted
action to restrain trade or commerce, is the best known of the federal
antitrust laws. The Department of Justice (DOJ) is the enforcement
agency. An agreement between distinct entities to restrain trade is key
to a Sherman charge. The unilateral action of a single enterprise, such
as an integrated medical group, to advance its interests in the
marketplace is not covered.
Courts interpret the Sherman Act as prohibiting
concerted action to unreasonably restrain trade and have developed two
ways to test the reasonableness of the restraint. The first, per se
violations, are so pernicious and so unjustified as to be presumed as
illegal even if done with consumer interests at heart; per se violations
include price fixing, boycotts, and market allocations by competitors.
The second test deploys a "rule of reason" analysis where the
anticompetitive effects of an alleged restraint are balanced against its
Section 2 of the Sherman Act and section 7 of the
Clayton Act prohibit monopolistic behaviors. The DOJ and the Federal
Trade Commission (FTC) enjoy enforcement authority. Prohibited
monopolistic actions require proof of market power. The relevant
geographic and product markets must be defined. Monopoly cases are
difficult and expensive to prove and to defend.
The AMA has Antitrust resources
to help understand federal antitrust laws and their applicability
to physician practices as well as AMA's advocacy efforts in the
Iowa Competition Law, Iowa Code chapter 553, is
designed to complement and be harmonized with the federal antitrust
laws. Similar to Section 1 of the Sherman Act, Iowa's law provides that a
contract, combination, or conspiracy between two or more persons shall
not restrain or monopolize trade or commerce in a relevant market.
Similar to Section 2 of the Sherman Act and Section 7 of the Clayton
Act, Iowa's law provides that a person shall not monopolize or attempt
to monopolize trade or commerce in a relevant market for the purpose of
excluding competition or controlling, fixing, or maintaining prices. The
Iowa attorney general is empowered to bring criminal and civil actions
under Iowa's law. In addition, a person injured or threatened with
injury by conduct prohibited under the law may seek statutory remedy.
FTC/DOJ Report on Competition in Health Care
The Federal Trade Commission (FTC) and the federal
Department of Justice (DOJ) issued a report entitled, "Improving HealthCare: A Dose of Competition" in July 2004. The FTC and DOJ found, among
other things, that state certificate of need (CON) laws "can actually
increase prices by fostering anticompetitive barriers to entry." A
disappointing feature of the report was its response to health plan
power in the marketplace. "Although there may be disparities in
bargaining position between some payors and some providers, the
available evidence does not indicate that there is a monopsony power
problem in most health care markets."
- What is the current role of competition in health care and how can it be enhanced to increase consumer welfare?
- How has and how should antitrust enforcement work to protect existing and potential competition in health care?
- Private payers, governments, and providers should
continue experiments to improve incentives for providers to lower costs
and enhance quality and for consumers to seek lower prices and better
- States should decrease barriers to entry into provider markets, including elimination of state certificate of need (CON) laws;
- Governments should reexamine the role of subsidies
in health care markets in light of their inefficiencies and potential to
- Government should not enact legislation to permit independent physicians to bargain collectively;
- States should consider the potential costs and benefits of regulating pharmacy benefit manager transparency;
- Governments should reconsider whether current
mandates best serve their citizens' health care needs. When deciding to
mandate particular benefits, governments should consider that such
mandates are likely to reduce competition, restrict consumer choice,
raise the cost of health insurance, and increase the number of uninsured