FTC Sues Surescripts for Illegal Monopolization of E-Prescription Markets

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Note: Inside Digital Health™ received a statement via email after this article was published. We have since updated the story.

The Federal Trade Commission (FTC) has sued Surescripts, alleging that the company employed illegal vertical and horizontal restraints to maintain its monopolies over two electronic prescribing (e-prescribing) markets, according to yesterday's press release from the agency.

The FTC is claiming that the health information technology company has engaged in a long-running anticompetitive scheme over the routing and eligibility markets.

“Surescripts’s illegal contracts denied customers and, ultimately, patients, the benefits of competition — including lower prices, increased output, thriving innovation, higher quality and more customer choice,” said Bruce Hoffman, Bureau of Competition director.

In a redacted complaint published by the FTC on April 24, it notes that to stave off competition, Surescripts took anticompetitive actions to protect and maintain its monopolies. While there has been a drastic increase in e-prescribing over the past 10 years — from 70 million routing transactions in 2008 to more than 1.7 billion in 2017 — the company has prevented any meaningful competition and has maintained at least a 95% share in each market.

To do this, the FTC claims that Surescripts changed its pricing policies to require long-term exclusivity from nearly all of its routing and eligibility customers to ensure that its customers would pay a higher price on all Surescripts’s transactions unless they used Surescripts exclusively.

The company allegedly had loyalty contracts that prevented competitors from attaining the critical mass necessary to be a true competitor in routing or eligibility.

According to the redacted complaint, Surescripts also engaged in a long-running threat campaign to make sure competitors could not get a toehold in either market.

In the complaint, the FTC said that when Allscripts, an electronic health record customer of Surescripts, tried to enter into a non-exclusive agreement with the company in 2014 so it could use Emdeon, Surescripts launched a series of threats to secure Allscripts’s exclusive use of Surescripts.

The FTC also noted in the complaint that in 2010, Surescripts entered into an agreement that prohibited RelayHealth — a company with many connections to the same customers Surescripts wanted — from competing in the routing market for six years.

Strict provisions of the contract keep preventing RelayHealth from competing against Surescripts in routing to this day, the complaint said.

“Through this litigation, we hope to eliminate the anticompetitive conduct, open the relevant markets to competition and redress the harm that Surescripts’s conduct has caused,” said Hoffman.

The vote to file the complaint was 5-0 and was filed under seal in the U.S. District Court for the District of Columbia on April 17, 2019.

Surescripts on the other hand, is disappointed at the allegations made by the FTC.

"For more than 18 years, we have operated fairly in an innovative and dynamic marketplace to increase patient safey, lower costs and ensure quality healthcare," Tom Skelton, CEO of Surescripts, said in a written statement to Inside Digital Health™.

Skelton added that the company has pioneered the use of two-sided networks to enable the safe exchange of patient health information and that Surescripts has reduced the price of e-prescribing by 70% ofver the past decade.

In the statement, Skelton wrote that Surescripts will be removing the loyalty provisions to its e-prescribing business contracts with pharmacies, which addresses one of the FTC's main concerns.

"We take our role seriously in helping medical professionals better serve patients, who are the ultimate beneficiaries of our nationwide health information network," Skelton wrote.

The complaint against Surescripts is just the latest example of the FTC’s commitment to stopping anticompetitive tactics in healthcare that harm consumers and raise the cost of care.

Most recently, the agency barred pharmaceutical company Impax Laboratories from entering into reverse-payment patent settlements after Impax blocked consumers’ access to a generic version of an extended-release opioid pain reliever.

In February, the FTC reached a global settlement with pharmaceutical manufacturer Teva Pharmaceuticals under the same conditions as Impax.

And last year, AbbVie was ordered to pay $448 million to consumers who overpaid for a testosterone replacement drug because of the company’s illegal tactics to maintain its monopoly over the drug.

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