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August 2023
Competition
The FTC filed a proposed order that would prohibit health information technology company Surescripts from engaging in exclusionary conduct and executing or enforcing non-compete agreements with current and former employees. The FTC’s proposed order, filed in federal court, would resolve charges that Surescripts used anticompetitive tactics to illegally monopolize two e-prescription drug markets and would provide immediate relief to consumers. The settlement follows a favorable federal court ruling that found that Surescripts possesses monopoly power in e-prescribing services with a 95 percent “supershare.” In adopting the Commission’s position, the opinion made important clarifications of the law, including on the establishment of monopoly power through market share and barriers to entry.
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The FTC learned that CooperCompanies Inc. terminated its $875 million acquisition of Cook Medical Holdings, LLC’s reproductive health business. In response, FTC Bureau of Competition Director Holly Vedova issued this statement: “Following a full-phase investigation by FTC staff, CooperCompanies’ decision to abandon this proposed acquisition ensures that critical reproductive health markets remain competitive. The FTC is committed to protecting patients from higher costs and preserving the incentive to innovate. This deal termination protects competition and is a win for patients. I want to express my appreciation for the cooperation between FTC staff and competition agencies in Australia and the United Kingdom.”
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The FTC voted to issue a statement cautioning against reliance on prior advocacy statements and studies related to pharmacy benefit mangers (PBMs) that no longer reflect current market realities. The statement is a response to PBMs’ continued reliance on older FTC advocacy materials that opposed mandatory PBM transparency and disclosure requirements, and it warns against reliance on the Commission’s prior conclusions, particularly given the FTC’s ongoing study of the PBM industry to update its understanding of the industry and its practices.
Consumer Protection and Privacy
The FTC is taking action under the FTC Act and the Opioid Addiction Recovery Fraud Prevention Act of 2018 (OARFPA) against the makers of Sobrenix, which was marketed to reduce and even eliminate alcohol cravings and consumption. According to the FTC complaint, a company called Rejuvica and its owners made numerous unsubstantiated and false claims about Sobrenix, a liquid tincture made with a blend of kudzu root and other herbs and vitamins, and used paid endorsers in deceptively formatted advertising. The defendants also used bogus review sites – including one touting Sobrenix – to deceive consumers about their products. As a result of the FTC’s suit, the defendants have agreed to a proposed court order that would permanently ban them from making any unsubstantiated claims about health care products or services, as well as require them to pay $650,000 to the FTC to be used to provide refunds to consumers.
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The operators of a “blessing loom” investment program that targeted African Americans and people struggling financially during the COVID-19 pandemic are banned from the business of multi-level marketing as a result of enforcement actions taken by the FTC and the State of Arkansas alleging the operation of an illegal pyramid scheme. In the joint complaint against Blessings In No Time (BINT), the FTC and the State of Arkansas alleged that Texas-based BINT Operations LLC and its two co-founders operated a chain referral pyramid scheme that bilked tens of millions of dollars from thousands of consumers. The complaint alleged that some BINT members paid over $50,000 to participate. BINT also allegedly prohibited participants from truthful, non-defamatory reviews and other information about the scheme on social media or online.
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The FTC is seeking comment on an application from the Entertainment Software Rating Board (ESRB) and others for a new mechanism for obtaining parental consent under the Children’s Online Privacy Protection Act Rule. ESRB, which currently operates a COPPA safe harbor program, was joined in its application by Yoti, a digital identity company, and SuperAwesome, which provides technology to help companies comply with parental verification requirements. The companies have requested approval for the use of “Privacy-Protective Facial Age Estimation” technology, which analyzes the geometry of a user’s face to confirm that they are an adult. Under the COPPA Rule, online sites and services directed to children under 13 must obtain parental consent before collecting or using personal information from a child. The Rule lays out a number of acceptable methods for gaining parental consent but also includes a provision allowing interested parties to submit new verifiable parental consent methods to the Commission for approval. The public will have until August 21 to submit a comment. After they are submitted, comments will be posted to Regulations.gov.
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In Other News
The FTC and the U.S. Department of Health and Human Services Office for Civil Rights (OCR) are cautioning hospitals and telehealth providers about privacy and security risks related to the use of online tracking technologies integrated into their websites or mobile apps that may be impermissibly disclosing consumers’ sensitive personal health data to third parties. The two agencies sent the joint letter to approximately 130 hospital systems and telehealth providers to alert them about the risks and concerns about the use of technologies such as the Meta/Facebook pixel and Google Analytics, that can track a user’s online activities. These tracking technologies gather identifiable information about users, usually without their knowledge and in ways that are hard for users to avoid, as users interact with a website or mobile app. In their letter, both agencies reiterated the risks posed by the unauthorized disclosure of an individual’s personal health information to third parties. For example, the disclosure of such information could reveal sensitive information including health conditions, diagnoses, medications, medical treatments, frequency of visits to health care professionals, and where an individual seeks medical treatment.
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The FTC has announced a claims process by which consumers who purchased a DreamCloud mattress and were influenced by the company’s claims that the product was made with U.S. materials can apply for a refund. The FTC sued the company responsible for DreamCloud mattresses in 2021. DreamCloud mattresses were advertised as “proudly made with 100% USA-made premium quality materials.” However, according to the FTC, all DreamCloud mattresses contain significant imported materials. The company agreed to settle the FTC’s charges and paid money to provide refunds to affected consumers.
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