Thursday, May 17, 2007

United States: Connecticut Attorney General Investigating Possible Anticompetitive Impact of Practice Guidelines

16 May 2007
Article by Judith L. Harris

Medical societies and associations of health professionals routinely adopt and disseminate practice guidelines, opine in position papers, provide expertise, and engage in advocacy before policymakers and, increasingly, before third-party payors on issues of concern to their membership. While these activities are generally designed to promote the highest quality patient care, they often, too, are in the best interest, sometimes the best pecuniary interest, of their members, and sometimes also have the effect of excluding certain products and services from the market.

The recent announcement by Richard Blumenthal, Connecticut’s Attorney General, of an investigation into the potentially anticompetitive impact of practice guidelines for the treatment of Lyme Disease—issued this past fall by the Infectious Diseases Society of America ("IDSA" or "Society")—has some in the scientific community crying "foul." At a minimum, however, Mr. Blumenthal’s investigation should serve as a caution to professional groups contemplating action that could adversely affect competing practitioners or the availability of treatment options.

Because of the very character of professional associations and learned societies, comprised as they are of individual competitors, and because of the nature of their activities and the reach of their influence, such groups and their members must be highly attentive to the antitrust laws. While some of their actions, such as "lobbying" governmental entities or legislatures on issues of collective concern, are generally immune from antitrust scrutiny, not all the activities of professional associations and learned societies are so protected.

It has long been recognized that by petitioning the government for certain forms of relief, competitors might be able to exclude others from commercial opportunities and thereby cause significant harm to competition. Notwithstanding such potentially anticompetitive results, however, courts have conferred antitrust immunity upon a wide range of activities designed to influence governmental bodies, as long as those activities do not fall within a "sham" exception. This exemption from the antitrust laws for legitimate efforts to influence legislative, administrative or judicial processes is known as the Noerr-Pennington doctrine, so named for the two U.S. Supreme Court cases in which the immunity was originally articulated. See, Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers v. Pennington, 381 U.S. 657 (1965). See also California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972).

However, many actions by professional associations, including those that tend to have the effect of excluding competitors or groups of competitors, are subject to antitrust scrutiny. As a general proposition, an association may be liable under Section 1 of the Sherman Act, 15 U.S.C. § 1, for engaging in exclusionary conduct intended to harm providers of products or services that pose a potential competitive threat to its members. Indeed, courts have frequently found professional associations or societies liable for unreasonable exclusionary behavior, including behavior growing out of the adoption of standards, practice guidelines and the like. See, e.g., American Society of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 556 (1982); Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 (1961).

Conduct has generally been deemed "exclusionary" not only when the exclusion is literal—such as when an authoritative standard-setting body uses a biased process to declare a product or service to be non-compliant with its standards—but also, for example, when an association of competitors engages in a coordinated campaign of disparagement intended to limit market access by others. In order to evaluate the legality of such conduct by a learned or professional society or association, courts generally apply a "rule of reason," meaning that joint conduct is deemed unlawful only where it is found to have resulted in an "unreasonable restraint on competition." Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49 (1977); see also, FTC v. Indiana Federation of Dentists, 476 U.S. 447, 458 (1986); Wilk v. American Medical Ass’n, 895 F. 2d 352, 359 (7th Cir. 1990).

In order to prevail in a rule of reason analysis, it must first be shown that a defendant possesses power in the relevant market and, then, that the actual or potential negative impact of the challenged conduct on competition in that market outweighs any putative benefits to consumers (or patients). Associations are typically treated as possessing market power if, either directly or through their members, they comprise a substantial portion of competitors in the relevant market or otherwise can be shown to wield substantial influence over competition in that market.

Claims have been brought with some regularity against medical associations and physician groups based also on unreasonable or unfounded disparagement of potentially competitive products or service providers. See, e.g., Summit Health, Ltd. v. Pinhas, 500 U.S. 322, 326-27 (1991) (antitrust claim properly stated against ophthalmologists who sought to prevent competition from a practitioner of a lower-cost surgical procedure by disseminating an unfair and biased peer review report); Wilk v. American Medical Ass’n, 895 F. 2d 352, 356–57 (7th Cir. 1990) (affirming an antitrust judgment against the AMA based on disparaging and unfounded characterization of chiropractors as "an unscientific cult" and other conduct intended to "eliminate chiropractic" competition), but see, Schachar v. American Academy of Ophthalmology, 870 F. 2d 397 (7th Cir. 1989) (rejecting the claim of a group of ophthalmologists performing radial keratotomy surgeries that sued the American Academy of Ophthalmology for labeling the procedure "experimental.").

Lately, more and more third-party payors have been relying on association practice guidelines and "expert" position papers describing treatment options and medical devices as "untested," "unproven," "experimental," and the like to deny coverage for a wide array of treatment options, often with devastating effects on patients. This appears to be the concern driving the Connecticut investigation. Further, Mr. Blumenthal apparently has not ruled out extending his office’s inquiry to insurers which deny coverage for chronic Lyme disease,- citing the IDSA guidelines in their coverage statements.

According to a statement by Mr. Blumenthal, the ISDA, through its overly strict recommendations, might harm Lyme disease patients by effectively limiting their insurance coverage. "These rules diminish the options available to doctors and their patients in ways that can sanction insurance company decisions to deny coverage, so they have an economic impact that could be very serious," Mr. Blumenthal said in an article that appeared in the Boston Globe in late December ("Connecticut disputes doctors’ Lyme disease guidelines," by Associated Press, Dec. 31, 2006.)

The scientific community is alarmed. A recent article in The Scientist describes Mr. Blumenthal’s investigation as "an unprecedented move that raises questions about the government’s role in scientific consensus." ("State official subpoenas infectious disease group," published Feb. 7, 2007). The Scientist quotes IDSA’s lawyer as saying that, "If we have to worry each time [we craft medical guidelines] that maybe we will be getting subpoenaed and to go through the time, effort, and expense of responding, then we might not take controversial but appropriate positions."

The ISDA, not surprisingly, sticks by the guidelines it enacted in October, which, it contends, were carefully researched and are sound. The Society’s website, when last visited April 19, 2007, prominently posted a message from its President, Dr. Henry Masur, in which he described ISDA Practice Guidelines as "valuable, credible, flexible," indeed, "one of the most important activities" of the Society. In his message, Dr. Masur noted that, last year alone, more than 150,000 visitors downloaded the Society’s guidelines from the IDSA website. Dr. Masur then went on to describe in some detail how IDSA ensures the quality of its guidelines…an action that he apparently felt compelled to take "(g)iven [the guidelines’] importance, and the recent attention some—particularly the new guidelines on Lyme disease—have received in the media."

At last check, Connecticut’s investigation remains open; its outcome uncertain. Mr. Blumenthal’s office is in the process of reviewing documents and answers to interrogatories provided by the Society in response to an administrative subpoena issued to the IDSA in November. Whatever the resolution of this particular investigation, the matter should serve to reinforce how carefully associations must tread when their actions might adversely impact competition and, thus, might implicate the antitrust laws.

This article is presented for informational purposes only and is not intended to constitute legal advice.
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