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Health Law Highlights

FTC Signals Its Intent To Pursue Nonprofit Health Care Entities With Its Non-compete Ban Whenever Possible

Summary of article from Seyfarth Shaw LLP, by Jesse Coleman, Yumna Khan:

The Federal Trade Commission’s (FTC) Final Rule banning non-competes in worker agreements may not exempt nonprofit health care entities, including most hospital systems in the US. The FTC asserts that merely claiming tax-exempt status is not enough to be beyond its jurisdiction; it will also examine whether the corporation is organized for charitable purposes and whether either the corporation or its members derive a profit. The FTC has previously exercised jurisdiction over nonprofit entities engaged in business on behalf of for-profit members. The Final Rule, set to take effect on September 4, 2024, is currently facing legal challenges questioning its constitutionality. In the interim, nonprofit health care entities should consult with legal counsel to determine potential impact from the FTC’s non-compete ban.

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Health Law Highlights

FTC and DOJ Seek Public Help Identifying “Serial Acquisition Strategy” Targets

Summary of article from Seyfarth Shaw LLP, by Brandon Bigelow, Robyn Marsh:

The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are expanding their investigation into businesses using “roll up” strategies to consolidate competitors and reduce competition across the U.S. economy. Previously, these agencies focused on the healthcare industry, but the new Request for Information invites the public to submit examples of companies using serial acquisition strategies in any industry. This move follows the FTC’s aggressive litigation against such strategies in the healthcare industry, as demonstrated in the case of FTC v. U.S. Anesthesia Partners, Inc. The May 23 Request for Information seeks input from a wide range of sources and invites them to identify specific examples of these strategies and their impact on competition. Public responses, due by July 22, 2024, may influence the government’s enforcement priorities and future actions across various markets and industries.

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Health Law Highlights

Is FTC’s Noncompete Rule a Concerning Development for Physicians?

Summary of article from Medical Economics, by Amanda Hill:

The Federal Trade Commission (FTC) has issued a rule prohibiting noncompete clauses, potentially impacting physicians nationwide. Critics argue this rule overreaches federal authority, creates ambiguities in exceptions, and exacerbates divisions between hospitals and physicians. While some physicians support the ban, arguing noncompetes give undue leverage to hospitals, others maintain that reasonable noncompetes can protect smaller practices. The rule introduces legal uncertainties and potential conflicts, with the U.S. Chamber of Commerce planning to challenge the decision. The FTC rule, despite its aim to protect the workforce, may instead cause confusion and legal disputes, potentially delaying its implementation.

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Health Law Highlights

Cracking the Whip: The FTC’s Clampdown on Healthcare Marketing

Summary of article from Nelson Hardiman, LLP, by Harry Nelson:

The U.S. healthcare system, driven by a complex mix of economic considerations, permits direct-to-consumer pharmaceutical advertising, unlike many other Western nations. However, this practice can lead to misleading claims and deceptive marketing, especially affecting vulnerable individuals. Recently, the Federal Trade Commission (FTC) has increased scrutiny on such practices, as evidenced by lawsuits against companies like AWAREmed and Rejuvika for misleading advertising. In 2024, the FTC also penalized telehealth providers, Cerebral and Monument, for violating confidentiality and misusing personal data. The FTC’s actions signal a shift towards protecting consumers from deceptive healthcare marketing practices.

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Health Law Highlights

FTC Cleared To Sue Texas Anesthesia Co., But Not PE Firm

Summary of article from Law360, by Bryan Koenig:

A Texas federal judge has ruled that the Federal Trade Commission (FTC) lacks the authority to pursue antitrust claims against private equity firm Welsh Carson Anderson & Stowe, but can proceed against the anesthesia group the firm created, U.S. Anesthesia Partners Inc (USAP). The judge ruled that the FTC could not prove an ongoing or likely future antitrust violation by Welsh Carson, which had sold off its controlling stake in USAP in 2017. This decision could impact the FTC’s efforts to challenge private equity strategies of acquiring entire sectors through individual transactions. The ruling also underscores the FTC’s ongoing struggle to expand its authority under Section 13(b) of the FTC Act. Despite this, the judge found sufficient evidence of ongoing violations by USAP, allowing the FTC’s case against it to proceed.

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Health Law Highlights

FTC Finalizes Expansion of Health Breach Notification Rule’s Broad Applicability to Unauthorized App Disclosures

Summary of article from Davis Wright Tremaine, by Adam H. Greene, Apurva Dharia:

The Federal Trade Commission (FTC) has finalized changes to the Health Breach Notification Rule (HBNR), expanding its scope to include virtually all health and wellness apps. The revised rule requires vendors of personal health records (PHRs) and related entities to notify individuals, the FTC, and, in some cases, the media of any unauthorized disclosure of identifiable health data. The updated rule also includes a broader definition of “health care services or supplies” and “breach of security,” and clarifies the role and responsibilities of PHR related entities. The FTC has also modernized the method of notice, expanded the content of the notice, and revised the timing of notice to the FTC. The changes signal the FTC’s increased prioritization of protecting consumers’ sensitive health information.

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Health Law Highlights

Is Your Compliance House In Order? Tips for Ensuring Private Equity and Portfolio Company Compliance

Summary of article from Bass, Berry & Sims PLC, by Angela Humphreys, Jennifer Michael:

The recent Request for Information by federal agencies highlights the need for private equity (PE) firms to have robust compliance programs for their healthcare sector investments. Such programs should align with the Office of Inspector General’s General Compliance Program Guidance, and include written policies, procedures, risk analyses, and audits. PE firms need to understand their role and risk profile in the portfolio company’s structure, including their involvement in executive hiring, business program implementation, and potential antitrust issues. Equity incentive awards should comply with both the Stark Law and the federal Anti-Kickback Statute. Lastly, PE firms should ensure attorney-client privilege is maintained in their interactions with both the portfolio company and outside counsel.

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Alert

FTC Ban on Non-Competes Complicates NFP Hospital Staffing Issues

Fitch Ratings reports that the Federal Trade Commission’s (FTC) new rule banning non-compete clauses could cause staffing issues for not-for-profit (NFP) hospitals already grappling with wage increases. The rule, which is set to take effect 120 days after its April 30, 2024, publication in the Federal Register, has already faced legal challenges. It could potentially increase wage pressure and introduce operational instability due to higher staff turnover, especially in smaller or rural NFP hospitals. The impact of the rule, if it survives court challenges, is expected to be felt in 2025. This development, along with other factors like minimum wage laws and increased scrutiny of hospital mergers and acquisitions, could sustain pressure on the sector.

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Health Law Highlights

US Challenges ‘Bogus’ Patents on Ozempic and Other Drugs in Effort to Spur Competition

Summary of article from AP News, by Matthew Perrone:

The Federal Trade Commission (FTC) is challenging patents on 20 brand-name drugs, including Ozempic, as part of the Biden administration’s efforts to target pharmaceutical industry practices that inflate prices. The FTC alleges that patents filed by companies such as Novo Nordisk, GlaxoSmithKline, and AstraZeneca are inaccurate or misleading. These patents, often used to prevent competition from cheaper generic medicines, are being scrutinized as they contribute to high prescription drug costs. This move follows a similar action in September when regulators challenged over 100 patents held by drug manufacturers. The companies have 30 days to withdraw or update their patent listings, or certify their legitimacy under penalty of perjury.

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Health Law Highlights

What the FTC’s Rule Banning Non-Competes Means for Healthcare

Summary of article from Nelson Mullins Riley & Scarborough LLP, by Candace Friel, Denise Gunter, Carrie Hanger:

The Federal Trade Commission (FTC) has finalized a rule banning most non-compete agreements, with the rule set to take effect 120 days after its publication in the Federal Register. The rule applies to all workers, regardless of title, job function, or compensation, excluding “Senior Executives” as per a narrowly defined term. Non-profit organizations are exempt from the rule. The rule is expected to significantly impact industries such as healthcare where non-compete agreements are common. Legal challenges to the rule have already been initiated, with the U.S. Chamber of Commerce announcing its intention to sue the FTC and a lawsuit filed on April 23, 2024.