As a new year begins, it seems singularly appropriate that we write about the ever expanding intersection of antitrust and healthcare law.

The Federal Trade Commission (FTC) recently affirmed a ruling which found that a state dental board's practice of writing cease and desist letters to non-dentists who provided teeth whitening services violated Section 5 of the FTC Act. In In re: North Carolina State Board of Dental Examiners, the FTC held that the practice by the North Carolina State Board of Dental Examiners (Board) of writing cease and desist letters to non-dentists who offered teeth whitening services illegally thwarted competition and ordered the Board to stop engaging in this anticompetitive conduct.

In 2004, dentists in North Carolina first began to complain about the less expensive nature of teeth whitening services provided by nondentists but rarely raised public health or safety concerns. In response, the Board sent cease and desist letters to non-dentist providers of teeth whitening services and landlords who leased them space in malls, kiosks and the like. The letters had the desired effect — non-dentist practitioners stopped offering the services, certain mall operators stopped leasing space for these services and several companies that had previously marketed teeth whitening products in North Carolina stopped marketing.

In its finding that there was no procompetitive justification for the Board's actions which resulted in higher prices and reduced choices for consumers, the FTC held:

  • The Board's intent in sending the letters was to exclude non-dentist providers from the market for teeth whitening services;
  • The Board's "health" or "safety" defenses were not cognizable defenses under the Sherman Act and even if they were, the Board provided no evidence to support such an assertion; and
  • Under the rule of reason analysis, the Board's concerted conduct violated section 5 of the FTC Act.

The FTC also rejected the Board's defense of state action immunity by which it claimed that the "actions were both taken pursuant to a clearly articulated and affirmatively expressed state policy and actively supervised by the state itself". The Board did not provide any evidence of "active supervision" of its actions by the state and the "clear articulation" requirement was not met.

In its ruling, the FTC sent a strong message: absent clear articulation and ongoing state supervision, a state medical agency is not entitled to state action immunity from federal antitrust liability.

With this opinion, the FTC rings in 2012 by reinforcing the standard on state action immunity for state medical boards. It is likely that the FTC's increasing antitrust regulation and enforcement will continue in the healthcare arena throughout 2012.

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