Recently, the United States Federal Trade Commission (FTC) announced a settlement with Surescripts over the company’s alleged use of illegal methods to obtain and keep monopolies over two parts of the electronic prescriptions market. Surescripts provides a network for healthcare providers to send prescriptions to pharmacies electronically. Surescripts also has the ability to contact insurance companies directly on behalf of patients to confirm benefit eligibility.
According to the FTC complaint, Surescripts monopolized two markets for e-prescriptions: (1) the market for routing e-prescriptions (which allows providers to send electronic prescriptions directly to pharmacies) and (2) the market for determining eligibility (which would allow health care providers to electronically determine patient eligibility for prescription coverage through access to insurance coverage and benefits information). The FTC had alleged that Surescripts required long-term exclusivity from customers and would punish those not in compliance with higher prices by increasing the costs of routing and eligibility multihoming through loyalty and exclusivity contracts.
According to the FTC, the settlement will prohibit Surescripts from “engaging in exclusionary conduct and executing or enforcing non-compete agreements with current and former employees.” One example of the behavior that FTC seeks to prohibit is Surescripts allegedly pressured Allscripts Healthcare Solutions, Inc., to prevent them from taking their business to a Surescripts competitor.
Under the Order, Surescripts will no longer be able to enter into, maintain, or enforce a contract, agreement, or understanding that:
- imposes a Majority Share Requirement upon a Customer;
- prevents or limits Customers from communicating with a third party regarding e-prescribing services without first setting up meetings between the Customer, Surescripts, and the third party;
- requires Customers to provide Surescripts a right of first refusal to provide e-prescribing services;
- prohibits Customers from entering, renewing, extending, or re-entering agreements for e-prescribing services that are not Surescripts’ e-prescribing services;
- among many other changes.
The settlement will also require Surescripts to send a letter to each Customer that provides notice of the FTC Order, a description of the contractual provisions the Order prohibits Surescripts from enforcing, and a description of Surescripts’ volume based pricing going forward. Notice of the FTC Order will also need to be published on Surescripts’ website within 10 days of the entry of the Order. Surescripts will also need to allow each Customer to immediately enter into a new contract on the same terms (except those prohibited by the Order) and remove provisions prohibited by the Order when Surescripts and the Customer renegotiate/renew their contracts.
Additionally, Surescripts is not permitted to enter into or enforce any contract, agreement, provision, or understanding that restricts or restrains the right or ability of any former or current employee to seek or accept employment with any Competitor for any period of time after the employee is no longer employed by Surescripts.
As one might expect, Surescripts will also be required to design, maintain, and operate an antitrust compliance program, with many mandated requirements and facets. There is also a requirement that Surescripts file verified written reports within 30 days after the Order is entered and another one six months later, as well as annual compliance reports for the next nineteen years. The FTC is also entitled to ask for additional compliance reports, if need be.
Surescripts neither admitted nor denied the allegations in the Complaint. “We’re pleased that this agreement brings an end to the FTC’s litigation, formalizing changes to our business practices that we started several years ago, including the elimination of loyalty provisions in contracts,” Surescripts said in a statement.