Washington, D.C. — In response to news that non-profit health system Novant has called off plans to acquire two North Carolina-based hospitals from Community Health Systems (CHS) after an appellate court granted the Federal Trade Commission’s (FTC) request for a preliminary injunction, the American Economic Liberties Project released the following statement.

“The FTC has made it a priority to stem the consolidation of regional healthcare markets, which drive up patient costs and depress wages and working conditions for healthcare workers,” said Lee Hepner, Senior Legal Counsel at the American Economic Liberties Project. “Healthcare systems are highly localized, and Novant’s $320 million acquisition would have allowed the company to control 65% of this regional inpatient market in North Carolina. This is a problem we are tracking across the country, from Pennsylvania to California, and the ripple effect of this win will be profound. The FTC is encouraging reinvestment in competitive markets that place patients and healthcare workers before unfair profit.”

The FTC sued to block Novant’s acquisition of two CHS hospitals in January, and in early June, a lower court approved the acquisition in a decision that would have given safe harbor to acquisitions by already-dominant healthcare systems, while expanding upon the rarely successful “weakened competitor” defense. Two weeks later, on June 18, the Fourth Circuit Court of Appeals intervened to stay the acquisition pending full appeal of the lower court’s decision, and on June 23, Novant announced it would abandon the attempted acquisition, citing ongoing scrutiny by the FTC. The news comes amid a series of other wins the FTC has been enjoying in the healthcare industry, especially in horizontal hospital mergers. Late last year, the FTC and California Attorney General succeeded in stopping further hospital consolidation in California after John Muir Health abandoned its proposed $142.5 million acquisition of San Ramon Regional Medical Center amid scrutiny from enforcers.

Other healthcare merger wins include pharma giant Sanofi calling off its acquisition of a new drug that threatens its monopoly on treatments for Pompe disease, following an FTC lawsuit. This monopoly, which allows Sanofi to charge patients over $750,000 per year, is now poised to be disrupted. Additionally, the 5th Circuit Court of Appeals ruled in favor of the FTC’s argument that Illumina’s acquisition of Grail would foreclose key input and substantially lessen competition in the market for multi-cancer early detection (MCED) tests. The decision marks the first time a federal court has ruled that a purely vertical merger violates Section 7 of the Clayton Act in several decades.

Read “The Harms of Hospital Mergers and How to Stop Them” to learn more.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.