An independent pharmacy has spearheaded a class action suit claiming Surescripts has engaged in anticompetitive behavior which violates federal law.
In the complaint, which names not only Surescripts but also RelayHealth and Allscripts Healthcare Solutions, New York-based Falconer Pharmacy claims that the defendants have violated the Sherman Act by engaging in a “decade-long” scheme designed to lock up the market for e-prescription routing and eligibility.
It asserts that as of 2009, Surescripts had monopolies over both activities, which are typically referred to collectively as “e-prescribing.” To protect these alleged monopolies, the suit says, Surescripts changed its pricing models to require most e-prescribing customers to sign long-term exclusive agreements or pay much higher transaction fees.
When pricing incentives didn’t work, Surescripts mounted other attacks, the suit says. For example, it claims that when EHR vendor Allscripts wanted to work with both Surescripts and Emdeon, Surescripts mounted a series of unnamed “threats” which convinced the EHR vendor to “join the anticompetitive scheme.”
Surescripts used a similar strategy with McKesson Corp.’s RelayHealth, the complaint says. After calculating that competition from RelayHealth could push fees for routing e-prescriptions down to 2 to 3 cents, Surescripts managed to talk RelayHealth into an agreement under which it wouldn’t compete in the routing market for six years. In exchange, RelayHealth received a portion of Surescripts transaction fees as a reseller, the suit says.
As a result of its anticompetitive activities, Surescripts has been able to keep transaction fees for e-prescribing high, with pharmacies such as Falconer paying at least 17 cents per routing transaction, the suit says. This represents price inflation of 566% to 1700% over fair market value of 1 and 3 cents per transaction, a number Surescripts itself has validated, the complaint notes.
In the filing, the plaintiffs ask the court to certify the class action, declare the Surescripts behavior it lays out to be illegal and award them an unspecific level of damages.
The class action follows on the heels of an antitrust suit filed in April against Surescripts by the Federal Trade Commission. In its complaint, the FTC alleged that Surescripts “employed illegal vertical and horizontal restraints” in order to maintain its monopolies over the routing and eligibility components of the e-prescribing business.
As with the class action, the FTC filing used anticompetitive exclusivity agreements, threats and “other exclusionary tactics” to keep the price of routing and eligibility services elevated. These tactics allowed Surescripts to maintain a 95% share over many years.