EDITOR’S NOTE

Anna Fabish

O’Melveny & Myers LLP

Los Angeles, CA

Competition and privacy law issues in the healthcare and pharmaceutical industries are constantly making headlines—and for good reason. The intersection of healthcare/ pharmaceutical regulation and policy with competition, privacy, and intellectual property law is generating a vast universe of intriguing questions. And if the amount of litigation and enforcement efforts in the United States and abroad is any indication, that universe is only growing. There is simply no escaping that hospitals and pharmacies are the foremost frontier for competition and privacy law issues today.

It is therefore with great excitement that I present the Winter 2017-18 issue of Competition, focusing solely on this timely and important topic. In preparing the issue, I had the pleasure of working with a tremendous group of authors, comprised of private practitioners, enforcers, academics, and economists. I extend my deepest thanks to them for their hard work and thoughtful commentary. The range of our authors’ backgrounds adds a dimension to the analysis presented in this issue of Competition that I find both fascinating and helpful as I grapple with many of these topics in my own practice. I hope these articles will be of similar interest and usefulness to you. Thank you also to the team of editors for their insight and assistance in finalizing these articles.

The collection of articles in our Winter 2017-2018 edition examines a sampling of various legal, economic, and policy questions presented by the healthcare and pharmaceutical sectors today:

First, the issue offers several discussions of healthcare merger-related topics. Lisl Dunlop provides an in-depth analysis of Certificates of Public Advantage ("COPA") in the wake of the recent high-profile merger of two healthcare systems, Wellmont and Mountain States, in Certificates of Public Advantage: Bypassing the FTC in Healthcare Mergers? Dunlop provides an overview of state COPA laws, how they offer an alternative route to consolidation, Federal Trade Commission opposition to COPA protection, and the policy arguments for and against this public health-oriented approach to hospital transactions. This edition of Competition also offers two perspectives on a broader topic related to the COPA debate: the role of efficiencies in healthcare mergers under current case law. In their article, Where Art Thou, Efficiencies? The Uncertain Role of Efficiencies in Merger Review, Kaley Fendall and David Maas argue that the current standard is too uncertain, and that courts and enforcers are too unwilling to credit efficiencies. The result, Fendall and Maas argue, is that procompetitive benefits are lost, and that more parties may seek immunity from antitrust review under COPA laws. In The Efficiencies Defenestration: Are Regulators Throwing Valid HealthCare Efficiencies Out The Window?, Jacob Snow, Ronnie Solomon and Kyle Quackenbush counter that the Horizontal Merger Guidelines already properly limit the scope of efficiencies to those that are merger-specific and verifiable, any uncertainties in the law notwithstanding. They explain their view that COPA laws should not be used as an excuse to lower the strict requirements for efficiencies and thereby justify otherwise anticompetitive mergers. Finally, Eric Emch, Thomas D. Jeitschko, and Arthur Zhou evaluate the complexity and effectiveness of merger remedies by reviewing agency case filings in the generic drug and other industries. Their article, What Past Agency Actions Say About Complexity in Merger Remedies, with An Application to Generic Drug Divestitures, uses this analysis to explore how merger remedies proposed by US antitrust agencies typically blur the lines between purely structural and purely behavioral fixes.

Next, this issue of Competition addresses two hot topics in privacy law related to the healthcare industry. Recent years have seen a renaissance in digital health technologies, from mobile health apps and medical records hosted in the cloud to Internet-connected medical devices and activity trackers. In Digital Health Privacy: Old Laws Meet New Technologies, Reece Hirsch and Jenny Harrison examine how HIPAA and other longstanding privacy laws are being adapted to regulate this new and ever-evolving technology landscape. Jay Edelson and Aaron Lawson address another important topic in healthcare privacy with their article, Rethinking Healthcare Data Breach Litigation. Edelson and Lawson discuss how, in data breach cases, courts and litigators routinely view cases through the lens of identity theft. They suggest that this focus ignores data security, and undercompensates data-breach victims.

The issue then offers two approaches to causation principles in pharmaceutical antitrust litigation. In Causation Principles in Pharmaceutical Antitrust Litigation, Steve Shadowen analyzes causation law as applied to typical pharmaceutical antitrust cases, such as reverse payment litigation. He argues that, where conduct is unlawful because of its propensity to cause a particular type of injury, plaintiffs satisfy their initial burden on causation by proving that they in fact suffered that type of injury. Ken O’Rourke and Sarah Trela argue for a different approach in their article, The Proximate Cause Requirement in Private Reverse Payment Antitrust Litigation. They suggest that the proximate causation element in private antitrust litigation requires a private plaintiff in a reverse payment case to prove the settlement harmed her. As part of this, O’Rourke and Trela argue, private plaintiffs must show—without resort to presumptions or proxies— that the reverse payment agreement, as opposed to the underlying patent, caused delay in generic entry and higher pharmaceutical prices.

The issue then provides Professor Michael Carrier‘s discussion of antitrust law’s role in addressing rising drug prices. In Antitrust’s Hidden Hook in Drug Price Increases, Carrier argues that although U.S. antitrust law does not directly target high drug prices, antitrust has a crucial role to play in addressing price increases resulting from anticompetitive conduct.

Our healthcare and pharmaceutical themed issue concludes with two pieces discussing certain economics and research underlying many types of competition cases in the healthcare and pharmaceutical sectors. Dr. Paul Wong‘s article, Uncertainty and Scientific Complexity: An Introduction to Economic Forces that Drive Current Debates in Healthcare Antitrust, provides an overview of healthcare antitrust economics. He explains how market frictions caused by uncertainty, such as adverse selection and agency, as well as the complexity of medicine, complicate the standard antitrust paradigm and create the need for detailed analyses. These issues, in turn, fuel some of the current debates in healthcare antitrust, including those concerning contracting practices in healthcare, Accountable Care Organizations, and the potential for market power.

Finally, Professor Robin Feldman, John Gray & Giora Ashkenazi discuss research related to the intersection of FDA regulation and antitrust law in Empirical Evidence of Drug Companies Using Citizen Petitions to Hold Off Competition. They offer their view of this research as showing that brand-name pharmaceutical companies have been systematically abusing the Food and Drug Administration’s citizen petition process to delay and stifle generic competitors.