UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
April 17, 1997
Paul L. Yde
Vinson & Elkins L.L.P.
The Willard Office Building
1455 Pennsylvania Ave., N.W.
Washington, D.C. 20004-1008
Dear Mr. Yde:
This letter responds to your request for an advisory opinion on behalf of the Foundation for the Accreditation of Hematopoietic Cell Therapy ("FAHCT") concerning FAHCT's standard-setting and accreditation activities pertaining to the collection, processing, and transplantation of hematopoietic progenitor cells. Based on our understanding of the facts as explained in your letter of December 17, 1996, and other information available to us, Commission staff have no present intention to recommend a challenge to the formation and operation of FAHCT as proposed.
As we understand the facts based on the information you have supplied, FAHCT is a non-profit corporation established to accredit facilities involved in hematopoietic progenitor cell transplantation. According to your letter, hematopoietic progenitor cell therapy refers generally to the infusion into a patient of blood-forming stem cells for the treatment of leukemia, certain other kinds of cancers, and some non-cancerous blood disorders. The blood-forming stem cells are derived from bone marrow, peripheral blood, or cord blood.
FAHCT's members are the International Society of Hematotherapy and Graft Engineering ("ISHAGE") and the American Society of Blood and Marrow Transplantation ("ASBMT"). The members of ISHAGE and ASBMT primarily are individuals associated with academic and research centers engaged in hematopoietic progenitor cell therapy. The majority of FAHCT's board of directors will be appointed by the two member organizations.(1)
FAHCT proposes to establish a program of standards, inspection, and accreditation of entities involved in medical or laboratory practice related to hematopoietic progenitor cell therapy. FAHCT has established standards of performance for all phases of collection, processing, and transplantation of hematopoietic progenitor cells. In FAHCT's view, these standards establish minimum guidelines for facilities and individuals performing hematopoietic progenitor cell transplantation and therapy or providing support services for such procedures. In addition, FAHCT will accredit medical facilities that seek certification of their compliance with FAHCT standards. Accreditation is voluntary, and can be sought by any medical or laboratory facility engaged in any aspect of hematopoietic progenitor cell therapy.
FAHCT states that its accreditation program is intended to address concerns about the safety and quality of hematopoietic progenitor cell therapy that have arisen as the science and technology of this therapy have developed and the number of facilities performing stem cell transplants has increased. FAHCT believes that private standards developed by persons engaged in hematopoietic progenitor cell therapy are better suited than is government regulation to promote patient safety without stifling further progress in the development of stem cell transplant therapies.(2) In addition, FAHCT anticipates that its standards will help insurers and patients evaluate the quality and cost effectiveness of facilities, practitioners, and practices in the field.
The FAHCT standards were developed from a combination of laboratory standards initially developed by ISHAGE and clinical standards initially developed by ASBMT. Those draft standards were refined in consultation with the North American Task Force for the Development of Standards for Hematopoietic Cell Transplantation ("NAFT"), a coalition of organizations interested in the development of common standards for hematopoietic progenitor cell therapy.(3) It is expected that FAHCT standards for stem cell processing and collection will not conflict with existing American Association of Blood Bank ("AABB") Standards for Hematopoietic Progenitor Cell Therapy; the AABB standards cover only the collection and processing of stem cells, and do not apply to transplantation procedures.
FAHCT's Standards for Hematopoietic Progenitor Cell Collection, Processing & Transplantation, summarized below, apply to all sources of hematopoietic progenitor cells(4) and all phases of collection, processing, and transplantation of these cells.(5)
The General Requirements, among other things, require facilities to develop and follow a standard operating procedures manual; implement protocols for evaluating performance; establish a quality management program; maintain a system for detecting and reporting errors and adverse reactions; and establish procedures for ensuring the safety of employees, donors, and patients.
The Clinical Transplantation Standards require accredited programs to have performed a minimum number of transplants in the year prior to accreditation;(6) undergo formal review of investigational treatment protocols; maintain data and quality management plans; maintain a dedicated transplant team with certain qualifications, training, and experience; have appropriately trained staff and access to consulting physicians; have designated inpatient and outpatient units meeting certain requirements; and have access to collection and processing facilities that meet FAHCT standards.
The Hematopoietic Progenitor Cell Donor and Cell Selection Collection Standards apply to selection and evaluation of donors; training and experience of staff; access to a laboratory and to emergency medical care; collection techniques; and recordkeeping.
The Hematopoietic Progenitor Cell Processing Standards address laboratory personnel; laboratory operating procedures and equipment; cryopreservation; labeling; inspection, storage, transportation and disposal of blood components; and recordkeeping.
FAHCT will implement an accreditation program incorporating on-site inspection by FAHCT inspectors and accreditation decisions by a committee of FAHCT. Accreditation will be open to clinical transplant programs, collection facilities, and processing laboratories, which may apply alone or together as part of a clinical transplant program or functionally linked stem cell collection and processing service. Accredited transplant programs are required to use collection facilities and processing laboratories that meet FAHCT standards with respect to those facilities' interactions with the accredited transplant program. Accredited processing laboratories must use cells collected in accordance with FAHCT standards, and accredited collection facilities "should" use a processing laboratory that meets FAHCT standards.(7) An accredited collection facility or processing laboratory may provide services to unaccredited transplant programs.
The accreditation process incorporates certain due process procedures, including the right to appeal denials of accreditation, assignment of deficiencies, denial of eligibility for on-site inspection, and assignment of particular inspectors. In addition, a facility found upon inspection to have deficiencies can request reinspection by a different inspection team.
In general, private standard-setting and certification or accreditation programs have the potential to promote competition by providing useful information to consumers. Such programs can make it easier for consumers to obtain useful information and to select among providers of a product or service. By providing information about quality and performance of products or services, standard-setting programs may facilitate quality competition and price/quality comparisons, increase consumer confidence in product quality and thereby increase demand, and facilitate entry by new sellers.
The actions of standard-setting bodies controlled by entities with horizontal business relationships are deemed concerted action, and are subject to scrutiny under the antitrust laws.(8) It is inherent in the standard-setting process that some products or services may fail to satisfy the standards that are developed and thus will not qualify for certification or accreditation. In addition, third parties' independent decisions to give weight to accreditation in making their purchasing decisions may give accreditation, or lack thereof, significant competitive impact. These results are not inherently anticompetitive, and standard-setting programs usually are evaluated under the rule of reason.(9)
In some circumstances, standard-setting programs can have anticompetitive effects that require an analysis of the reasonableness of the underlying standards. For example, some aspects of an accreditation or certification program may directly impose an unreasonable restraint on competition among the participants in the program.(10) In addition, adherence to a standard-setting program may in effect be an agreement not to sell nonaccredited products or services.(11) In other circumstances, competitors may abuse or distort the standard-setting process for the purpose of reducing competition, thus imposing significant harm to market competition while not providing the procompetitive benefits that can flow from standard-setting programs.(12) In instances where a product cannot succeed in the market without meeting certain product standards, standards that lack a reasonable basis may restrain competition unreasonably.(13)
Further, a standard may have a direct exclusionary effect when market participants agree not to deal with uncertified entities.(14) Concerted efforts to enforce product standards can warrant more rigorous antitrust scrutiny than does the establishment of standards.(15)
An evaluation of the process proposed by FAHCT in light of these principles does not reveal grounds for concern that the program raises inherent antitrust concerns. Providing information about the quality and services of hematopoietic progenitor cell transplant services providers is potentially beneficial to consumers, and the standards do not appear, on their face, unduly to restrict competition among accredited entities in ways not reasonably related to FAHCT's legitimate purposes in establishing the standards.
Based on the information you have provided, it does not appear that FAHCT is attempting, or has the power, to impose its standards on the market. It has no power to require buyer adherence to its determinations. Moreover, there is no agreement by certified entities not to deal with uncertified facilities. Accredited collection facilities and processing labs may deal with unaccredited transplant programs. It is our understanding that in those instances where the standards require accredited entities to deal with other entities that meet FAHCT standards, compliance can be demonstrated by means other than FAHCT accreditation, including accreditation by organizations with substantially similar standards. The requirements that accredited transplant programs use stem cells acquired from processing and collection facilities that meet FAHCT standards, and that accredited processing laboratories use blood collected in accordance with FAHCT standards, appear to be reasonably related to FAHCT's purpose to have standards that govern all phases of handling of stem cells used in accredited transplant programs.
Moreover, a number of procedural protections are built into FAHCT's accreditation process. This is not determinative of the antitrust analysis; the antitrust laws do not require standard-setting bodies to adhere to any particular due process standards.(16) Nonetheless, the use of procedures designed to prevent abuse of the process for anticompetitive purposes, and to promote informed decision-making, should reduce the risk that the program in practice will reduce competition unreasonably.(17)
Of course, we cannot in this context, and do not purport to, evaluate the substantive reasonableness of FAHCT's standards. Moreover, we cannot predict the actual marketplace impact of the proposed standards and accreditation process, or anticipate future developments in technology or medical practice that may affect the future impact of the process. Based on the proposed program as described above, however, it does not appear that the proposed standard-setting and certification program is intended, or is likely, to restrain competition unreasonably.
Establishment of minimum volume standards for accredited transplant programs is one area where standards could potentially be designed to unjustifiably exclude some programs. In this instance, however, the standard does not appear to establish an unreasonable barrier to accreditation. The volume standard chosen, while not based on a firm empirical foundation, does not appear to be unreasonably high, and FAHCT has stated that it intends to reevaluate the standard as outcome data relating specifically to hematopoietic progenitor cell transplants becomes available.
For the reasons discussed above, Commission staff has no present intention to recommend a challenge to the proposed operation of FAHCT's standard-setting and accreditation program. This letter sets out the views of the staff of the Bureau of Competition, as authorized by the Commission's Rules of Practice. Under Commission Rule § 1.3(c), 16 C.F.R. § 1.3(c), the Commission is not bound by this staff opinion and reserves the right to rescind it at a later time. In addition, this office retains the right to reconsider the questions involved and, with notice to the requesting party, to rescind or revoke the opinion if implementation of the proposed program results in substantial anticompetitive effects, if the program is used for improper purposes, if facts change significantly, or if it would be in the public interest to do so.
Robert F. Leibenluft
1. Each of the two member organizations will appoint five board members; those ten will appoint five public members of the board. FAHCT and its member organizations are each non-profit corporations operated exclusively for charitable, scientific, and educational purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code.
2. The U.S. Food and Drug Administration has considered regulation of some types of blood stem cells intended for transplantation. Proposed Approach to Regulation of Cellular and Tissue-Based Products; Availability and Public Meeting, 62 Fed. Reg. 9721 (Mar. 4, 1997); Draft Document Concerning the Regulation of Placental/Umbilical Cord Blood Stem Cells Intended for Transplantation or Further Manufacture into Injectable Products, 61 Fed. Reg. 7087 (Feb. 26, 1996).
3. NAFT includes ISHAGE, ASBMT, the American Association of Blood Banks, the American Association of Tissue Banks, the American Red Cross, the American Society of Apheresis, the American Blood Council, the Leukemia Society of America, the National Heart, Lung and Blood Institute, the National Marrow Donor Program, and the Canadian Bone Marrow Transplant Group.
4. The standards cover, but are not limited to, cells isolated from bone marrow, peripheral blood, or placental and umbilical cord blood.
5. Cell manipulations include removal or enrichment of cell populations, expansion of hematopoietic cell populations, cryopreservation, infusion, and expansion or activation of lymphocyte cells.
6. The draft standards require a program to have performed at least 10 transplants of each type (allogeneic or autologous) for which it seeks accreditation. Allogeneic transplants use cells obtained from a donor, while autologous transplants use cells obtained from the patient into whom they later are infused. FAHCT states that the minimum volume requirement is derived from empirical research that has established that for certain complex surgical procedures (such as organ transplantation or cardiac bypass surgery), there is a correlation between the number of procedures performed by a facility and positive medical outcomes. In addition, FAHCT believes that compliance with this standard, among others, demonstrates a significant commitment to transplantation that produces higher quality care and better results. FAHCT does not assert that there is a specific empirical basis for the particular minimum number of transplants required by the current standards. However, FAHCT believes that facilities performing fewer than ten procedures per year are less likely to achieve the same quality performance as facilities performing a larger number of procedures. FAHCT intends to gather outcome data relating to hematopoietic progenitor cell transplantation and will consider whether that information supports adoption of a different volume performance standard in the future.
7. Under FAHCT standards, "should" indicates that an activity is recommended or advised, but that there may be effective alternatives.
8. See Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 500 (1988); American Soc'y of Mechanical Eng'rs, Inc. v. Hydrolevel Corp., 456 U.S. 556, 572-73 (1982).
9. See Allied Tube, 486 U.S. at 501.
10. See U. S. v. American Bar Ass'n, 1996-2 Trade Cas. (CCH) § 71,453 (D.D.C. 1996) (consent order) (complaint alleged that ABA restrained competition among professional personnel at ABA-approved law schools by fixing their compensation levels and working conditions); Board for Certification in Pedorthics, 91 F.T.C. 1204 (1978) (advisory opinion) (Commission refused to approve certification program that required, among other things, adherence to code of ethics that could be construed to prevent advertising availability and price of pedorthics services).
11. Allied Tube, 486 U.S. at 501; Accrediting Commission on Career Schools and Colleges of Technology, 1995 F.T.C. Advisory Opinion, File No. P94 0415 (Commission refused to approve a proposed accreditation standard that would define acceptable tuition levels, reasoning that this would in effect be an agreement among members of the accrediting body to charge no more that the standard would permit).
12. Allied Tube, 486 U.S. at 496 (manufacturers "packed" meeting at which standard was to be voted upon, in order to prevent approval of a competing product); Hydrolevel, 456 U.S. at 560-64 (manufacturer manipulated the process to obtain an unjustified interpretation of a safety code, declaring a competitor's product unsafe).
13. American Soc'y of Sanitary Eng'rs, 106 F.T.C. 324 (1985) (consent order).
14. See Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656, 659-60 (1961) (per curiam); American Bar Association, 96-2 Trade Cas. (CCH) § 71,453 (standard that accredited schools could not enroll transfer students or graduates of schools not accredited by ABA).
15. Allied Tube, 486 U.S. at 501 n.6. See also Schachar v. American Academy of Ophthalmology, Inc., 870 F.2d 397, 399 (7th Cir. 1989) (where organization stated its opinion that a surgical procedure was experimental and urged caution in its use until further research was completed, but did not prohibit its members from performing the procedure or induce hospital or insurers not to permit or pay for it, it was held that the action was not a restraint on competition).
16. See Northwest Wholesale Stationers v. Pacific Stationery and Printing Co., 472 U.S. 284, 293 (1985).
17. As the Supreme Court has recognized, private standard-setting programs can be procompetitive when they are "based on the merits of objective expert judgments and through procedures that prevent the standard-setting process from being biased by members with economic interests in stifling competition . . . ." Allied Tube, 486 U.S. at 501.