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CHAPTER IV
PRICING CONDUCT
IN HEALTH CARE INDUSTRIES
“Pricing conduct” covers a broad range of activities. One of the major
purposes of the antitrust laws is to prevent concerted and unilateral
conduct that directly or indirectly affects prices as a result of seller or
buyer market power. This chapter outlines several types of collusive and
exclusionary conduct arising in the health care sector that can affect prices
and thus may violate the antitrust laws.
A. Horizontal Price-Fixing Agreements Among Providers and
Insurers
“Naked” price-fixing agreements among competing sellers or buyers
are per se unlawful. In the health care sector, horizontal price-fixing
agreements among providers can arise in a number of contexts and forms.
For example, members of a medical society might simply agree on the
prices at which they will offer their services;1 a group of providers, through
an association or otherwise, might agree to refuse to contract with a health
1. See, e.g., United States v. Lake Country Optometric Soc’y, Crim. No.
W95CR114 (W.D. Tex. 1996) (involving a guilty plea for fixing price of
eye exams; $75,000 fine and five-year probation).
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plan unless it increases reimbursement2 or copayment amounts;3 staffing
companies might agree to fix wages for medical professionals in a certain
geographic area;4 or the group might develop a minimum fee schedule,5 an
“advisory” or “suggested” fee schedule,6 or a relative value guide
including suggested relative values for different medical services that,
when multiplied by conversion factors of specific dollar amounts,
becomes a fee schedule.7 Or, as discussed below, a frequent instance of
price-fixing in the health care sector at present is the joint negotiation of
fee-for-service prices with health plans by provider-controlled contracting
networks on behalf of the competing provider members.
Horizontal price-fixing concerns can arise when competing physician
groups agree among themselves on the terms by which they will provide
2. See, e.g., Baltimore Metro. Pharm. Ass’n, 117 F.T.C. 95 (1994) (consent
order); Mich. State Med. Soc’y, 101 F.T.C. 191 (1983) (finding the
existence of a “boycott” of Blue Cross and Medicaid to increase
reimbursement); Consent Decree, United States v. Mass. Allergy Soc’y,
1992 WL 178713 (D. Mass. 1992) (alleging that defendant forced HMO to
increase reimbursement); Consent Decree, United States v. Mont. Nursing
Home Ass’n, 1982 WL 1867 (D. Mont. 1982) (settling case alleging
agreement among nursing homes not to participate in Medicaid absent
increased reimbursement); DeGregorio v. Segal, 443 F. Supp. 1257 (E.D.
Pa. 1978) (same).
(9th Cir. 1992).
4. See, e.g., U.S. Dep’t of Justice, Press Release, Former Owner of Health
Care Staffing Company Indicted for Wage Fixing (Dec. 20, 2020),
available at https://www.justice.gov/opa/pr/former-owner-health-care-
staffing-company-indicted-wage-fixing (the DOJ brought its first criminal
charges for a wage fixing conspiracy).
1962).
6. See, e.g., Alston, 974 F.2d at 1214 (“[A]doption of suggested . . . fee
schedules will run afoul of Section One’s per se rule as a thinly veiled
attempt at price fixing.”). But see United States v. Am. Soc’y of
Anesthesiologists, 473 F. Supp. 147 (S.D.N.Y. 1979) (upholding
defendant’s advisory fee schedule).
7. See, e.g., American Coll. of Obstetricians & Gynecologists, 88 F.T.C. 955
(1976), modified, 104 F.T.C. 524 (1984). For an extended discussion of
the development, dissemination, and use of such schedules, see Am. Soc’y
of Internal Med., 105 F.T.C. 505 (1985) (FTC Advisory Opinion).
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services to hospitals and their patients. In one case, for example, the
Federal Trade Commission (FTC) challenged an agreement between two
anesthesiology practices that agreed on the price they would demand from
a hospital to provide coverage after refusing to negotiate with the hospital
separately.8
On the buyer side, hospitals might agree on the wages to pay their
nurses,9 or a sham group-purchasing organization may be no more than a
buyer price-fixing cartel. Pharmacies have alleged that pharmacy benefit
managers (PBMs) are a conduit through which PBM health insurer
customers fix the prices paid to pharmacies for dispensing prescriptions.10
Naked horizontal price-fixing agreements are subject to possible
criminal prosecution by the U.S. Department of Justice (DOJ).11 Although
rare, the DOJ has filed criminal actions against provider groups for
participating in price-fixing agreements.12 In 2020, the DOJ filed its first
criminal action for a wage fixing conspiracy against a former owner of a
8. In re Grossmont Anesthesia Servs. Med. Grp., 136 F.T.C. 65 (2003).
9. See, e.g., Consent Decree and Competitive Impact Statement, United States
v. Ariz. Hosp. & Healthcare Ass’n, 2007-2 Trade Cas. (CCH) ¶ 75,869 (D.
Ariz. 2007) (challenging alleged hospital conspiracy fixing traveling-nurse
wages). See generally Jeff Miles, The Nursing Shortage, Wage-
Information Sharing Among Competing Hospitals, and the Antitrust Laws,
7 HOUS. J. HEALTH L. & POL’Y 305 (2007).
(N.D. Ill. 2005) (applying a rule of reason analysis to the alleged price
conspiracy claim); N. Jackson Pharmacy v. Expr ess Scripts, Inc., 345 F.
Supp. 2d 1279 (N.D. Ala. 2004) (“[I]f plan sponsors have conspired to fix
prices, a horizontal restraint is created even if PBMs are used to carry out
the scheme.”); Bellevue Drug Co. v. Advance PCS, 2004 WL 724490 (E.D.
Pa. 2004).
11. See, e.g., Information, United States v. Rhone-Poulenc Biochimie, S.A.,
No. 4:03-cr-567R (E.D. Mo. Sept. 18, 2003), available at
http://www.usdoj.gov/atr/public/press_releases/2003/201284.htm
(alleging price-fixing conspiracy among producers of a chemical that
decreases rate at which X-ray contrast media disperses in the body during
imaging procedures, and resulting in a guilty plea and $5 million fine).
Information, United States v. Lake Country Optometric Soc’y, No.
W9-cr-114 (W.D. Tex. Dec. 15, 1995), available at
http://www.usdoj.gov/atr/cases/f0600/0607.pdf.
