Surescripts files motion to dismiss FTC's antitrust case

Medical justice
Surescripts has fired back at the Federal Trade Commission in its antitrust case and filed a motion to dismiss the FTC's charges in federal court. (Getty/yavdat)

Electronic prescribing company Surescripts has fired back at the Federal Trade Commission (FTC) in its antitrust case and filed a motion to dismiss the FTC's charges in federal court Friday.

The FTC filed a lawsuit against Surescripts in federal court April 17 accusing the health information company of illegally monopolizing the e-prescribing market. It's the FTC's latest move to rein in what it views as anti-competitive tactics in the healthcare industry.

The FTC complaint focused on certain provisions of Surescripts' e-prescribing and eligibility contracts it alleges are anti-competitive. The company employed "illegal vertical and horizontal restraints in order to maintain its monopolies over two e-prescribing markets: routing and eligibility," according to the FTC's allegations.

E-prescribing is growing rapidly as healthcare providers and payers are using the technology to process patient prescriptions in a more streamlined and cost-effective way compared to paper prescriptions. As a dominant player in the market, Surescripts has maintained at least a 95% share over many years, according to the FTC's complaint (PDF) released to the public April 24. 

In a 65-page filing, Surescripts puts forward a number of arguments in response to the FTC's case.

The federal court lacks jurisdiction for the case, Surescripts said in its court filing, and with this antitrust case the FTC is seeking to stretch the boundaries of its regulatory mandate.

RELATED: FTC sues Surescripts, charges company with illegally monopolizing e-prescribing market

"The novel nature of the complaint means that Congress did not authorize the FTC to bring this case to federal court, which lacks jurisdiction to resolve it, instead of its own administrative process," Surescripts said in its motion to dismiss.

"We continue to be disappointed at the allegations made by the Federal Trade Commission. We wholeheartedly share the FTC’s focus on lowering healthcare costs, and we have achieved significant reductions with e-prescribing for many years," Surescripts CEO Tom Skelton said in a statement. 

The FTC’s complaint makes significant factual errors about Surescripts’ business and mischaracterizes the economic realities of the e-prescribing market, the company said.

For example, the company points out that the FTC cites Surescripts’ contracts with electronic health record (EHR) vendor Epic as a key example of a loyalty provision that would require the health system to maintain exclusivity to Surescripts for the term of the contract. 

But Surescripts’ officials say the contract with Epic has never contained a loyalty agreement.

The FTC also describes Surescripts’ contracts as including a penalty provision the agency claims would discourage EHR vendors from using multiple networks or switching away from Surescripts by requiring EHRs to repay loyalty incentives that they previously earned.

But in its motion to dismiss, Surescripts argues that there is no such requirement for any EHR to pay back any incentive payment earned following a notice of termination, and EHRs may freely terminate with just six months' notice.

The FTC’s complaint fails to plead monopolization as a matter of law for several reasons, the company argues. "First, the FTC’s assertion that Surescripts’ loyalty pricing provisions are 'exclusive dealing' subject to analysis under the rule of reason is flatly wrong: Optional low pricing such as that offered y Surescripts is only illegal if predatory, and the FTC does not allege predatory pricing," the company argued in its motion to dismiss.

In its complaint, the FTC accuses the company of maintaining its dominant position through "anticompetitive tactics" that "thwarted competitors from gaining share in the routing and eligibility markets."

In filing the lawsuit, the FTC said it is seeking to undo and prevent Surescripts’ unfair methods of competition, restore competition and provide monetary redress to consumers.

“For the past decade, Surescripts has used a series of anticompetitive contracts throughout the e-prescribing industry to eliminate competition and keep out competitors,” Bureau of Competition Director Bruce Hoffman said in a statement. “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. 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.”

Surescripts argues that it has reduced the cost of e-prescribing by 70% since 2009. Since 2016, the company has driven a 64% improvement in the accuracy of the more than 5 million electronic prescriptions that it processes each day, the company said.

"There is no question that e-prescribing has brought enormous value to patients and clinicians alike through innovations in accuracy, safety, and convenience," Skelton said. We take seriously our role in helping serve patients and the people who care for them, and we are confident that our business practices support that goal. And, our business continues to evolve, including our removal of loyalty provisions from our agreements with pharmacies."  

The complaint against Surescripts is the latest example of the FTC's moves to rein in the healthcare industry.

In February, the FTC reached a global settlement with pharmaceutical manufacturer Teva Pharmaceutical Industries, barring the company from engaging in reverse-payment patent settlement agreements that block consumers’ access to lower-priced generic drugs.

Last month, the FTC barred another pharmaceutical company, Impax Laboratories, from entering into reverse-payment patent settlements after concluding Impax used this tactic to block consumers’ access to a generic version of the extended-release opioid pain reliever Opana ER.

Last year, a federal court ordered another pharmaceutical company, AbbVie, to pay $448 million to consumers who overpaid for testosterone replacement drug Androgel because of AbbVie’s illegal tactics to maintain its monopoly over the drug.