Federal Trade Commission v. Surescripts: Supreme Court to Decide FTC’s Authority to Seek Monetary Penalties
In FTC v. Surescripts, the Federal Trade Commission (“FTC”) has sued Surescripts alleging illegal vertical & horizontal restraints to maintain monopolies over “e-prescribing” markets. The FTC alleges Surescripts’ imposition of loyalty provisions in its contracts with pharmacies, including major chains, and nearly all of its PBM customers, foreclosed nearly 80% of the pharmacy side of the routing network from potential competition. The FTC asserts that Surescripts’ actions violate Section 2 of the Sherman Act and thus constitute an unfair method of competition in violation of Section 5(a) of the FTC Act.
The FTC, in recent cases has demanded substantial monetary payments citing sec 13(b) of the FTC Act, as providing authority in cases of all kinds. Anyone who has negotiated a consent decree in a false advertising matter with the FTC is familiar with the stance taken by the agency as to the amount of harm inflicted on consumers. The FTC treats every dollar of revenue earned from a product or service tainted by an alleged misstatement or deceptive practice (as well as outright scams and frauds) as the result of that deception and subject to recovery by FTC on behalf of consumers. However, there have been increasingly successful challenges to the FTC’s authority to seek monetary penalties. For example, in FTC v. AbbVie, involving a reverse payment antitrust decision, the Third Circuit reversed a district court decision based on sec 13(b) ordering AbbVie and Besins Healthcare Inc. to pay $448 million for allegedly filing sham patent lawsuits to stifle competition.
Conversely, a recent decision by the U.S. Court of Appeals for the Ninth Circuit, FTC v. OMICS Group Inc. , reinforced the FTC’s ability to establish a rebuttable presumption that all of a defendant company’s revenue from activities related to what the FTC alleges are deceptive practices can be recovered in civil penalties. Finding OMICS liable, the court awarded the $50.1 million requested by the FTC.
Enter the Supreme Court who will now decide the issue. SCOTUS has granted certiorari and will soon hear FTC v. Credit Bureau Center LLC, , and AMG Capital Management LLC et al. v. FTC raising the question of whether the FTC, having wielded this authority for many years, actually possesses it.
The Surescripts case is now turning on whether or not the FTC can collect such monetary remedies with Surescripts’ filing a brief contending that FTC can only exercise powers that Congress creates such as injunctions, but not restitution or disgorgement. Surescripts sets up a potential all-or-nothing situation for the commission’s future monetary relief. The Surescripts case serves as a reminder to corporate counsel regarding exclusive distribution agreements which can be subject to allegations of exclusive dealing.
How Frier Levitt Can Help
Frier Levitt has extensive experience both on the plaintiff and defendant side of antitrust actions and investigations, representing both practitioners and healthcare entities. We handle a wide range of matters ranging from false labeling/advertising to allegations of industry-wide vertical/horizontal restraints. Contact us to speak to our of our life sciences attorneys today.
 Civ Act No. 1:19-01080-JDB (D.D.C.), FTC File No. 1410210 (April 19, 2019).
 FTC v. AbbVie Inc., No. 18-2621, _ F.3d _ (3d Cir. Sept. 30, 2020).
 Federal Trade Commission v. OMICS Group Inc., No. 19-15788 (9th Cir. Sept. 11, 2020).
 591 U.S. 2 (July 9, 2020) granting cert in appeals of AMG Capital Management LLC v. FTC , 910 F.3d 417 (9th Cir. 2018) and FTC v. Credit Bureau Center , 937 F.3d 764 (7th Cir. 2019).
 Case number 19-825.
 Case number 19-508.