FTC Charges Surescripts with Monopolizing e-Prescribing Market

April 25, 2019 - The Federal Trade Commission (FTC) is suing Surescripts, alleging that the health information exchange company is using illegal vertical and horizontal restraints to maintain its monopoly over two key segments of the e-prescribing process: routing and eligibility .

“The FTC’s complaint against Surescripts, filed in federal court on April 17, 2019, is the latest example of the agency’s commitment to stopping anticompetitive tactics in the healthcare industry that harm consumers and raise the cost of care for Americans,” the FTC said.

“The FTC is seeking to undo and prevent Surescripts’s unfair methods of competition, restore competition, and provide monetary redress to consumers.”

According to the complaint, Surescripts monopolized the routing market for enabling providers to send electronic prescriptions directly to pharmacies.

FTC also alleges that the company monopolized the market for electronically determining eligibility by accessing health insurance and benefits information.

The complaint states that Surescripts intended to keep e-prescription routing and eligibility customers on both sides of each market from using additional platforms.

In addition to the alleged use of anticompetitive exclusivity agreements, threats, and other tactics, the FTC claims that Surescripts took steps to increase the costs of using additional routing and eligibility platforms through loyalty and exclusivity contracts.

Per FTC’s complaint, Surescripts’s tactics kept competitors from gaining share in the routing and eligibility markets, resulting in the company maintaining at least a 95 percent share in each market over several years.

FTC alleges that Surescripts was able to maintain this monopoly despite the explosive growth of routing and eligibility transactions, which jumped from nearly 70 million routing transactions in 2008 to more than 1.7 billion in 2017.

FTC’s complaint against Surescripts adds to the agency’s commitment to curb anticompetitive methods in the healthcare industry. In February 2019, FTC reached a settlement with Teva Pharmaceuticals Industries Ltd., barring the pharmaceutical manufacturer from reverse-payment patent settlement agreements that block consumers’ access to lower-priced generic drugs.

Additionally, the FTC recently barred pharmaceutical company Impax Laboratories LLC from entering into reverse-payment patent settlements after finding that Impax was using this tactic to block consumer access to a generic version of an opioid pain reliever.

The FTC voted 5-0 to file the complaint against Surescripts.  The agency aims to restore competition to the e-prescribing market, which will lead to lower costs and more choices for 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,” said Bruce Hoffman, Bureau of Competition Director.

“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.”

Update 4/25/2019: Tom Skelton, CEO of Surescripts, has issued a statement responding to the FTC’s allegations:

“Surescripts is very disappointed at the allegations made today by the Federal Trade Commission. For more than 18 years, we have operated fairly in an innovative and dynamic marketplace to increase patient safety, lower costs and ensure quality healthcare."

"Surescripts pioneered the use of two-sided networks that enable the safe and secure exchange of patient health information. Since 2009, Surescripts has reduced the price of electronic prescribing by 70%. And, in just the last three years, we drove a 64% improvement in the accuracy of the more than 5 million electronic prescriptions we process each day."

"We are making an important change to our e-prescribing business agreements with pharmacies by removing the loyalty provisions in those contracts. This step addresses one of the FTC’s chief concerns while reflecting the current dynamics of the healthcare industry and the state of electronic prescribing today."

"Surescripts has been cooperating with the FTC throughout its investigation, and we remain focused on meeting our customers’ needs. We take seriously our role in helping medical professionals better serve patients, who are the ultimate beneficiaries of our nationwide health information network.”