Antitrust law helps ensure fair competition and innovation. Under the Biden administration, the FTC had expressed an interest in ensuring that health care markets are competitive to improve costs, care, and innovation. The Trump administration has similarly expressed its intent to protect competition in health care markets. While antitrust enforcement has often been applied to monopolistic practices in industries like pharmaceuticals and technology, recently it has increasingly focused on the clinical trial site landscape, where exclusive agreements, site consolidations, and unfair pricing strategies can limit competition and patient access to trials.
This article introduces the fundamentals of antitrust law as applied to clinical trial sites, including key risks for sponsors, contract research organizations (“CROs”), and sites themselves, as well as compliance strategies to mitigate legal exposure.
Understanding Antitrust Law
Antitrust laws are designed to prevent unfair competition that could harm businesses, consumers, or innovation. In the U.S., the three primary federal antitrust statutes include:
- The Sherman Act (1890), which prohibits monopolization and anticompetitive agreements. In the clinical research sector, this could include the use of exclusive contracting.
- The Clayton Act (1914), which restricts mergers and acquisitions that may reduce competition or tend to create a monopoly, including excessive consolidation of clinical trial sites by private equity.
- The Federal Trade Commission (“FTC”) Act (1914), which prohibits unfair business practices that hinder competition—for example, some kinds of clinical trial site access restrictions.
How Antitrust Law Applies to Clinical Trial Sites
Only 3 percent of the nation’s physicians and patients participate in clinical research. However, these sites are often where patients with no further standard of care options turn to for lifesaving therapy. Accordingly, clinical trial sites function as critical access points for research and patient recruitment. Lack of availability of clinical trial sites can hence present a bottleneck to clinical research sponsors and CROs. The lack of availability of such sites can significantly impact trial costs, innovation, and market competition, as well as access for patient care. Antitrust concerns may arise when trial site networks, CROs, or sponsors engage in behavior that limits reasonable access to trials.
1. Exclusive Contracts and Site Lockout
Sponsors and their representatives such as CROs generally avoid signing exclusive contracts with sites. CROs act on the sponsor’s behalf and therefore, like sponsors, have significant negotiation power. They help sponsors recruit clinical trial sites and manage clinical research projects. Accordingly, clinical trial sites are often beholden to CROs and sponsors and therefore have a power differential with them. However, both sponsors and CROs may have preferred arrangements with clinical trial sites and may hence sign them before other sites. While such preferred site arrangements may not be inherently problematic, if such an arrangement escalates to sponsors or CROs signing exclusive contracts with large site networks or hospital systems, it can rachet up the risk profile of the transaction and may be seen as anticompetitive. This could lead to FTC scrutiny.
For example, if a major CRO only allows trials to take place at sites it owns and it prevents or otherwise blocks the use of independent hospitals or research centers, it could trigger a claim of unfair competition. Similarly, steering by CROs to their wholly owned sites could have similar implications.
2. Price-Fixing Among Clinical Trial Sites
Sites routinely complain about the inadequacy of payment terms, and they routinely address the inadequacy of direct payments by requiring an additional indirect payments fee, which can be as high as 70 percent of the direct payments. This is especially true with large academic institutions that participate in publicly and privately funded research.
The Trump administration recently announced a 15 percent cap on indirect costs as applicable to National Institutes of Health (NIH) grants. Though this policy is currently being challenged and is blocked for the time being, it would represent a direct impact on large academic institutions and also worries smaller commercial clinical trial sites, which are concerned that private sponsors may impose similar limits on them. To battle these downward pricing pressures, trial sites and site networks may feel pressure to discuss sharing pricing strategies, or even discuss minimum site fees. Sites must be cautious that this could be interpreted as improper coordination of collusive price-fixing and a violation of the Sherman Act and FTC Act, since it could be seen to artificially maintain, stabilize, or inflate trial costs.
3. Mergers & Acquisitions in Site Networks
There has recently been an uptick in clinical trial site mergers and acquisitions. As clinical trial site consolidation increases, the FTC and Department of Justice may scrutinize mergers to prevent market dominance that reduces competition, especially if it eliminates regional or treatment-area-related competition or raises clinical trial costs. In such cases, regulators could block or reverse the merger.
4. Site Approval Delays as a Competitive Tactic
There has been significant vertical integration in the clinical trial space, with large private equity companies owning CROs, sites, institutional review boards (“IRBs”), and more. Accordingly, it is possible for such a private equity company to favor its own CROs, sites, and IRBs over independent ones. While some CROs may choose to outright favor an individual site, others could simply slow the approval process for independent sites, including site initiation visits, to effectively render them noncompetitive. If a dominant trial network or a CRO with its own clinical trial site slows approvals for independent sites to gain market advantage, it may be considered an anticompetitive tactic.
Best Practices for Compliance
To avoid antitrust violations, clinical trial stakeholders must proactively implement compliance safeguards, such as the following practices.
- Practice Transparent Site Selection: Develop objective, data-driven site selection criteria and disclose why certain sites are chosen to avoid misunderstandings and exclusionary claims. At a practical level, this must be balanced against the risk of unnecessary liability risk from private malfeasant actors.
- Avoid Exclusive Agreements: Exclusive arrangements can harm competition unless justified by efficiency, and such contracts must not substantially foreclose access for independent sites.
- Prohibit Price Coordination: Sites must be able to independently negotiate fees. Standardized pricing agreements can lead to assertions of anticompetitive behavior.
- Monitor Mergers & Acquisitions: Site acquisitions generally afford greater multiples for larger site networks. Excessive market concentration can significantly impact pricing for a specific disease state or local area. Such an impact may have antitrust risks. To avoid such risks, it is recommended to conduct antitrust impact assessments before acquiring competing sites. It may, in some circumstances, be prudent to offer contractual commitments to maintain market competition.
- Avoid Self-Preferencing: CROs should ensure reasonable access to trials for independent sites. Sponsors and CROs should audit CRO site selection processes to avoid allegations of unfair competition or market favoritism. While sometimes difficult to achieve, granting equal access to independent sites is often a preferred, but not required, option to consider.
Conclusion
Regulators, including the FTC, Department of Justice, and Food and Drug Administration, are monitoring how trial sites, CROs, and sponsors interact in ways that affect market access, pricing, and competition. As clinical trial operations evolve, the intersection of antitrust law and research site competition is becoming increasingly important. To mitigate legal risks, stakeholders should adopt transparent, fair business practices and proactively assess contracts, mergers, and trial site selection processes for antitrust compliance.
