In April 2019, the Federal Trade Commission sued Surescripts, alleging that the company employed illegal vertical and horizontal restraints in order to maintain its monopolies over two electronic prescribing markets: routing and eligibility. Now the FTC has filed a proposed settlement, without monetary penalties, in federal court that would prohibit Surescripts from engaging in exclusionary conduct and executing or enforcing non-compete agreements with current and former employees.
Arlington, Va.-based Surescripts connects more than 2 million healthcare professionals and organizations data on more than 99 percent of American patients. In 2022, Surescripts processed 21.7 billion health information transactions.
According to the company’s statistics, more than 250,000 clinicians across all 50 states and Washington, D.C. (27 percent more users than in 2021) used Surescripts Record Locator & Exchange to locate and exchange more than 100 million clinical documents each month—bringing the total number of clinical documents retrieved to more than 1 billion annually for the first time.
The FTC said that its proposed order would resolve charges that Surescripts used anticompetitive tactics to illegally monopolize two e-prescription drug markets and would provide immediate relief to consumers.
The FTC also said that the settlement follows a favorable federal court ruling that found that Surescripts possesses monopoly power in e-prescribing services with a 95 percent “supershare.” The agency said the court’s opinion made important clarifications of the law, including on the establishment of monopoly power through market share and barriers to entry.
“The FTC will not hesitate to take action in enforcing the antitrust laws to protect healthcare consumers,” said FTC Bureau of Competition Director Holly Vedova, in a statement. “The proposed order is a victory in creating a fair and competitive playing field in the e-prescription drug market. In large part because of Surescripts’ conduct, virtually everyone today who has a prescription filled electronically does so via the Surescripts networks. The proposed order would eliminate the anticompetitive restraints Surescripts has imposed on its customers since 2010 and would create conditions that allow competition to flourish for the benefit of anyone who gets a prescription filled at a pharmacy.”
Surescripts issued a statement from its CEO about the settlement. “Surescripts is proud to have pioneered electronic prescribing that has brought enormous value to patients and care providers alike. For more than two decades, Surescripts has delivered innovations that increase patient safety, lower costs and ensure quality care,” said Frank Harvey, CEO of Surescripts. “We’re pleased that this agreement brings an end to the FTC’s litigation, formalizing changes to our business practices that we started several years ago, including the elimination of loyalty provisions in contracts. We are committed to continuous innovation and remain focused on serving our customers who make up the Surescripts Network Alliance and ultimately the patients they serve.”
In its suit, the FTC alleged that Surescripts intentionally set out to keep e-prescription routing and eligibility customers on both sides of each market from using competing platforms (a practice known as multihoming), by using anticompetitive exclusivity agreements, threats, and other exclusionary tactics to achieve its goal.
The Court denied Surescripts’ motion to dismiss in January 2020, and in March 2022 Surescripts and the FTC filed motions for summary judgement. In March 2023, the Court granted the FTC’s motion for partial summary judgment and encouraged the Commission and Surescripts to engage in settlement discussions. The district court then referred the case to mediation.
The FTC’s proposed order has a 20-year term and would prohibit Surescripts from engaging in the types of exclusionary conduct alleged in the FTC’s case. The proposed order also goes beyond routing and eligibility, extending the same prohibitions to Surescripts’ medication history services and the company’s on-demand formulary services, which uses data that identifies the patient’s group or plan level prescription benefit information for a specific or alternative drug.
The FTC said that the proposed order would:
- Prohibit Surescripts from entering into, maintaining, or enforcing contracts that impose a majority share requirement (e.g., exclusivity or loyalty agreements) on its routing and eligibility customers, including through all-unit discounting.
- Prohibit Surescripts from implementing other problematic provisions it has used in the past to prevent or limit the ability of customers to do business with Surescripts’ competitors.
- Bar Surescripts from preventing customers from promoting competitors’ services; preventing and limiting customers’ ability to communicate with competitors; and requiring that customers provide Surescripts a right of first refusal.
- Bar Surescripts from entering into, maintaining, or enforcing agreements that prevent rivals from competing with Surescripts in routing and eligibility.
- Prohibit Surescripts from discriminating against or threatening customers who refuse to agree to a majority share requirement.
- Extend the same relief to Surescripts’ medication history and on-demand formulary services.
- Bar Surescripts from entering into or enforcing any employee non-compete agreement with current and former employees that would prevent those employees from working for a competing e-prescribing service provider.
The Commission vote authorizing staff to file the proposed order for permanent injunction and equitable relief in the U.S. District Court for the District of Columbia was 3-0.
Earlier this year, Surescripts announced that it has applied to become a Qualified Health Information Network (QHIN) as part of the Trusted Exchange Framework and Common Agreement (TEFCA), a 21st Century Cures Act requirement to create a “network of networks” for sharing health data across the country.