The Justice Department has sued Blue Cross Blue Shield of Michigan, asserting that the company has violated antitrust laws in order to gain a competitive advantage against rival health insurance carriers. BCBS-Michigan is the state’s dominant health insurer, covering more than 60% of Michigan’s 3 million insured residents. The suit, filed in Federal District Court in Detroit, alleges that BCBS-Michigan has used its market power as leverage to coerce hospitals to charge higher prices to BCBS-Michigan’s competitors.
Antitrust is the law of competition. Antitrust law seeks to encourage and enforce competitive markets. Antitrust law is principally codified in the federal Sherman Act and Clayton Act, and many states also have enacted statutes modeled after these Acts. In many cases, antitrust law provides for treble damages and attorney’s fees against an offending party for anticompetitive conduct.
Our firm has recently filed a similar antitrust suit on behalf of a Florida hospital against a major pharmaceutical company. The class action suit, filed in Federal District Court in Tampa, involves the market for the drug adenosine, which is used by healthcare providers as an adjunct to cardiac stress tests. Japanese pharmaceutical giant Astellas controls over 90% of the market for adenosine used in cardiac stress tests, and also holds a patent over the recommended method of administering adenosine in connection with stress tests. The suit alleges that Astellas has used this market power as leverage to coerce healthcare providers to purchase its branded adenosine drug as opposed to chemically identical, but cheaper, generic alternatives. Astellas charges approximately 450% more for its branded drug as compared to the price charged by its unbranded competitors. The overall excess cost to U.S. healthcare providers exceeds $100 million annually.
In the Michigan suit, the Justice Department has focused on contractual provisions stipulating that healthcare providers must charge other insurers up to 40% more than they charge BCBS-Michigan. The Justice Department asserts that these “most favored nation” clauses simultaneously have inflated healthcare costs and prevented competing insurers from entering the market. This is consistent with findings of the Government Accounting Office, which reveal growing concentration in insurance markets for small groups, such as those with 50 or fewer employees. A 2008 study showed BCBS as the largest carrier in 36 of the 44 states that identified their top carriers.
This is an area of law that is highly specialized and for that reason most lawyers won’t take these cases. Our firm handles antitrust cases on behalf of businesses of all types and sizes. Please contact Archie Grubb at 1-800-898-2034 or Archie.Grubb@beasleyallen.com to learn more about our antitrust practice.
Source: New York Times
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