FTC Charges Surescripts for Monopolistic ePrescribing Practices

The big Health IT news coming out yesterday was the FTC’s decision to charge Surescripts with the illegal monopolization of the ePrescribing Market. You can read the full press release announcing these charges on the FTC website and the FTC’s complaint against Surescripts. Here’s the opening description:

The Federal Trade Commission sued the health information company Surescripts, alleging that the company employed illegal vertical and horizontal restraints in order to maintain its monopolies over two electronic prescribing, or “e-prescribing,” markets: routing and eligibility.

They went on to describe practices in question as follows:

“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 Bureau of Competition Director Bruce Hoffman. “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.”

In the charges, they assert that Surescripts monopolized two separate markets: the market for routing of e-Prescriptions and the market for determining eligibility.

As far as the legal questions of these charges, I think that Arien Malec described it best:

You can read some other commentary on this news from Farzad Mostashari and Michael Kades which I found interesting. The complexity of this situation and how the FTC chooses to define a monopoly is going to be precedent-setting and certainly is some complex legal work.

Surescripts CEO, Tom Skelton, has already responded to these charges. Here’s an excerpt of his response:

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.

It’s hard to not read the changes to their business agreements as an admission of some guilt. Although, that’s an industry statement and not a legal one. What’s fascinating is that at this point Surescripts has already essentially created a monopoly of the ePrescribing market, so it doesn’t need those business agreements as much now. Everyone that’s worked in health IT has known that Surescripts has been the dominant player forever. If you were doing ePrescribing you had to work with Surescripts.

I’ll leave the full legal analysis to the legal experts. However, these charges do raise a really interesting question for the health IT industry. Should ePrescribing and ePrescriptions be a public utility that’s controlled by one entity or should it be a competitive market with multiple providers? It seems like the FTC wants the later. While I generally love competition, I think there’s a strong case to be made that ePrescription could be much better with one dominant player and some reasonable controls so they don’t gouge the market.

As the Surescripts response states, they’ve been able to reduce the price of electronic prescriptions and much of that is likely due to the fact that they’re the dominant player in the market. Will that change with more competitors? Will other costs be driven up if every EHR vendor has to integrate with multiple eprescription vendors? Silos have been a major issue in healthcare, and ePrescribing competition would create a bunch of new prescription silos that healthcare organizations and EHR vendors would have to manage.

Another challenging part of this case is the methods that Surescripts allegedly used to prevent other entrants from competing with them in the market. I’m interested in diving into the details of these practices. I’d guess that we’d find similar practices happening with EHR vendors as well. No EHR vendor is quite as dominant nationally as Surescripts is, but within regions, there is certainly EHR domination that occurs. I wonder if some of the same charges will apply to EHR vendors.

What do you think of these charges against Surescripts? Is this a good thing for healthcare? Is this going to cause major problems for ePrescribing? What will be the impact of these charges more broadly? Let us know your thoughts and perspectives in the comments and on social media with @healthcarescene.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

2 Comments

  • It funny company’s use their expertise, sweat and money to build a better safer more efficient widget than anyone else and then the gov wants to put the brakes on. Surescripts has done more for provider, patient and pharmacies interoperability, efficiency and safety than the ONC & gov has ever even come close too accomplishing.

  • jr,
    That’s one take on it. The other potential take is that they used monopolistic practices to keep competition out so they could build what you describe. That’s illegal in the US. It is ironic though that they’ve achieved some of what the government has been trying to achieve.

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