The Mayo Clinic is now among a dozen hospitals and systems gunning for the biggest producers of plasma-derived therapies, Baxter International and CSL. Those companies’ behavior was cast in a suspicious light during a Federal Trade Commission action last year blocking further consolidation to a market it considered “troubling.”
Seeing red over plasma
Providers' lawsuits accuse Baxter, CSL of collusion
The Mayo Clinic filed its lawsuit this month in U.S. District Court in Chicago, where a parade of lawsuits seeking class-action status recently were consolidated on a single docket. The lawsuits allege that CSL and Baxter coordinated output in order to fix and raise prices, working largely through the industry’s trade group, the Plasma Protein Therapeutics Association.
Spokeswomen for CSL and Deerfield, Ill.-based Baxter issued statements calling the lawsuits baseless and promising to defend themselves aggressively. A lawyer representing the plasma association replied in an e-mail that the organization “has always acted in compliance with the antitrust laws. We are confident a court will agree.”
Last May the FTC filed an administrative challenge and sought an injunction in federal court to stop Australia-based CSL from buying competitor Talecris Biotherapeutics for $3.1 billion. The companies abandoned the deal in June.
The lawsuits began appearing in federal courts the next month and heavily quote the government’s analysis of the market for a handful of medically critical products derived from collected blood plasma, such as immune globulin. Portions of those documents remained under seal until late last year.
“Suppliers have learned they can maximize profits if each firm does its part to maintain overall industry ‘stability,’ holding back on expanding output to avoid driving prices lower,” the FTC asserted in its complaint. “CSL and Baxter even have explored means of punishing firms that dare to ‘break ranks and chase market share,’ ” the FTC added in one of many portions initially redacted but made public in November. According to the government, CSL’s bid for Talecris was driven by the smaller competitor’s plans to increase production.
The FTC argued in a motion seeking to make the full version public that “the relevant quoted language suggests a strong possibility of ongoing coordinated interaction between firms in the plasma industry.” CSL, meanwhile, countered unsuccessfully that the FTC presented the citations “selectively and misleadingly.”
The Mayo Clinic, which declined to comment for this story, describes in its lawsuit that the system was concerned about the cost and availability of plasma products that are “critical to the health and survival of many of Mayo Clinic’s patients,” and the organization provided “substantial assistance and support to the FTC during the course of its investigation into the proposed merger.”
According to the narrative presented in the lawsuit, Baxter and CSL bought their way to large market shares by acquiring rivals. They then, according to the complaint, worked through the trade group, dominated by their own executives, in order to monitor inventories and send each other signals regarding supplies and prices, abusing a system devised by the industry to avoid shortages. After the plasma association meetings, company executives exchanged competitive information when they “gathered at bars for drinks or at restaurants for dinner away from the watchful eyes of association attorneys and other outsiders,” the lawsuit alleges.
On its own, that behavior would not necessarily constitute collusion, according to an attorney. “To me, that conduct is just as consistent with a bunch of old fat boys sitting around drinking and talking about the Cleveland Cavaliers and L.A. Lakers,” said Jeff Miles, a partner in the law firm Ober, Kaler, Grimes & Shriver.
In many respects, the lawsuits resemble thousands of cases in various industries that allege a conspiracy based on parallel action by competitors and were predictable as follow-on actions to the FTC action, which Miles said included details that are practically “an invitation for private plaintiffs to come in and do something about it.”
An FTC spokesman declined to say whether there’s an ongoing investigation into conduct in the market.
Miles, who is not representing any of the parties in the litigation, said the case will turn on whether there’s any evidence that there was in fact an agreement. “It may be that the Mayo people are just so pissed off about having to pay high prices, and these crazy plaintiffs lawyers will take the case on contingency.”
Like the Mayo Clinic, most of the hospitals and systems that are plaintiffs either didn’t return calls about the lawsuits or declined to comment. One of them, Des Moines-based Iowa Health System, responded to a request for an interview with a written statement. “Iowa Health System hospitals, physicians, and other providers purchase and use substantial amounts of blood plasma products. Assuring the prices of the products we use are as low as possible and are the result of free and fair open-market competition are basic values of ours.”
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