Case: 1:19-cv-07035 Document #: 1 Filed: 10/25/19 Page 1 of 61 PageID #:1

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
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FALCONER PHARMACY, INC., on behalf of itself and
all other similarly situation,
Plaintiff,

Civil Action No.

JURY TRIAL DEMANDED

v.
SURESCRIPTS, LLC; RELAYHEALTH; and
ALLSCRIPTS HEALTHCARE SOLUTIONS INC.,
Defendants.
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PLAINTIFF’S CLASS ACTION COMPLAINT

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Plaintiff Falconer Pharmacy, Inc. (“Plaintiff”) brings this action individually, and on
behalf of a class of all persons and entities similarly situated (the “Class”), for damages and
injunctive relief under the antitrust laws of the United States against defendants Surescripts, LLC
(“Surescripts”), RelayHealth, and Allscripts Healthcare Solutions, Inc. (“Allscripts”) (together,
the “Defendants”). Plaintiff alleges facts regarding itself based on personal knowledge, and all
other facts below on information and belief after an investigation by counsel. Plaintiff believes
that discovery of the Defendants, and third parties, will uncover evidence supporting the
allegations made on information and belief.
I. NATURE OF THE CASE
1.

This is an action under Sections 1 and 2 of the Sherman Act to restrain

anticompetitive conduct by Surescripts, the nation’s largest provider of “e-prescribing” services,
and to remedy the harms of its decade-long anticompetitive scheme.
2.

The details of this scheme first became public on May 3, 2019 when the Federal

Trade Commission (“FTC”) filed a lawsuit against Surescripts in the United States District Court
for the District of Columbia.
3.

Surescripts has engaged in a long- running anticompetitive scheme to

maintain its monopolies over two separate, complementary markets: (1) electronic
prescription routing (“routing”) and (2) eligibility, which are often collectively referred to as
“e-prescribing.” Routing is the transmission of prescription and prescription-related
information from a prescriber (via the prescriber’s electronic health record (“EHR”) system)
to a pharmacy. Eligibility is the transmission of a patient’s formulary and benefit
information from a payer (usually the patient’s pharmacy benefit manager (“PBM”)) to a
prescriber’s EHR.

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4.

In 2009, Surescripts had monopolies over routing and eligibility. With both of

these markets poised to experience explosive growth due to federal incentives for eprescribing, Surescripts feared that other health information technology companies could
threaten its dominant positions. To neutralize these competitive threats, Surescripts took a
series of anticompetitive actions to protect and maintain its monopolies. This multifaceted
anticompetitive scheme has been remarkably successful: Despite a massive increase in eprescribing over the past decade, Surescripts has prevented any meaningful competition,
maintaining at least a 95% share (by transaction volume) in each market.
5.

First, Surescripts changed its pricing policies to require long-term exclusivity

from nearly all of its routing and eligibility customers. Surescripts designed its new pricing
to ensure that its customers would pay a higher price on all of Surescripts’s transactions unless
they were “loyal” to Surescripts, i.e., used Surescripts exclusively. With its 95%-plus share
in both markets, Surescripts knew that no competitor could ever offer customers enough
savings to compensate customers for the skyrocketing costs the customers would face by
paying Surescripts’s higher “non-loyal” price on their remaining Surescripts transactions.
Surescripts’s web of loyalty contracts prevented competitors from attaining the critical mass
necessary to be a viable competitor in either routing or eligibility. Those effectively exclusive
contracts foreclosed at least 70% of each market, eliminating multiple competitive attempts
from other companies, such as Emdeon, that offered lower prices and greater innovation. All
of this was done intentionally, as one Surescripts vice president gloated about how
Surescripts’s loyalty contracts scheme excluded a competitor, Emdeon: “It[‘]s nice when a
plan comes together.” Another executive testified under oath, “pricing isn’t dictated by
competition at Surescripts.”

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6.

Second, Surescripts has engaged in a long-running campaign of threats and other

non-merits-based competition to ensure that no other competitor could get a toehold in either
market. For example, when Allscripts, a large EHR customer of Surescripts, attempted to enter
into a non-exclusive agreement with Surescripts in 2014 so Allscripts could use Emdeon,
Surescripts launched a series of threats-what senior Surescripts executives called their “nuclear
missiles.” These threats were intended to secure Allscripts’s continued exclusive use of
Surescripts and quash the threat from Emdeon. Allscripts ultimately chose to join the
anticompetitive scheme instead of fighting Surescripts. Thus, the competitive threat from
Emdeon as a routing provider was eliminated.
7.

Third, Surescripts eliminated the competitive risk posed by RelayHealth, a

subsidiary of McKesson Corporation, in routing. Surescripts feared that RelayHealth-with
its extensive connections to many of the same customers Surescripts wanted to lock up via
its loyalty scheme-had a “natural ability to capture 15-20% of transaction volume.”
Surescripts understood that competition from RelayHealth would have “dropped the price [for
routing] down to 2 to 3 cents at any time.” To eliminate this competitive risk, in 2010,
Surescripts and RelayHealth entered into an agreement that prohibited RelayHealth from
competing in the routing market for six years. Although this agreement facially preserved
the existing “value-added reseller” relationship between the two companies, Surescripts
executives have repeatedly stated that, from Surescripts’s perspective, the sole benefit of
that ongoing relationship is that it sidelines RelayHealth as a competitor. In return for its
acquiescence in the anticompetitive scheme, RelayHealth received a portion of the
supracompetitive routing profits as a “reseller.” Although the formal non-compete is no longer in
the agreement, strict contract provisions continue to prevent RelayHealth from competing against

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Surescripts in routing, ensuring that the routing market suffers from the effects of that noncompete today.
8.

Due to Defendants’ ongoing conduct, there is no meaningful competition in the

markets for routing or eligibility. The decade-long monopolies in these markets have produced
predictable effects: higher prices, reduced quality, stifled innovation, suppressed output, and
stymied alternative business models. Pharmacies, like Plaintiff here, typically pay at least 17
cents per routing transaction under Surescripts’ monopolistic regime. Surescripts has admitted
that competitive prices in the routing market would be between 1 and 3 cents a transaction.
Using Surescripts’ own numbers, revealed by the Federal Trade Commission investigation,
Plaintiffs have paid, and continue to pay, routing prices that are inflated by at least 566-1700%
due to Defendants’ anticompetitive conduct.
9.

These pennies add up for independent pharmacies, Plaintiff and members of the

Class. In 2013, 1 billion new and refill prescriptions were routed to pharmacies electronically. In
2018, Surescripts claims it processed 1.9 billion e-prescriptions alone.1 That adds up to billions
of overcharge transactions and supracompetitive prices during the class period.
10.

Had Surescripts’ 1.9 billion e-prescriptions in 2018 been routed at competitive

prices instead of monopoly prices, Plaintiff and the Class would have saved millions of dollars in
that year alone. And this scheme has been underway for almost a decade.
II. JURISDICTION AND VENUE
11.

This action arises under sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2,

section 4 of the Clayton Act, 15 U.S.C. § 15(a). Plaintiff seeks damages for its injuries, and those
suffered by members of the Class, resulting from Defendants’ anticompetitive conduct that

1

https://surescripts.com/news-center/national-progress-report-2018/

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inflated the price of e-prescription routing services to pharmacies. This Court has subject matter
jurisdiction under 28 U.S.C. §§ 1331(federal question), 1337(a) (antitrust), and 15 U.S.C. § 15
(antitrust).
12.

The Court also has jurisdiction over this action pursuant to 28 U.S.C. § 1332(d)

because this is a class action in which the aggregate amount in controversy exceeds $5,000,000
and at least one member of the putative class is a citizen of a state different from that of
Surescripts.
13.

Defendants transact business within this district, and they transact their affairs and

carry out interstate trade and commerce, in substantial part, in this district and/or have an agent
and/or can be found in this district. Venue is appropriate within this district under section 12 of
the Clayton Act, 15 U.S.C. § 22 (nationwide venue for antitrust matters), and 28 U.S.C. §1391(b)
and (c) (general venue provisions).
III. PARTIES
14.

Plaintiff Falconer Pharmacy, Inc. is a pharmacy located in Falconer, New York.

Plaintiff has paid Surescripts e-prescription routing charges.
15.

Defendant Surescripts is a for-profit Delaware limited liability company, with its

principal place of business at 2800 Crystal Drive, Arlington, VA 22202. Except where otherwise
specified, “Surescripts” refers to Surescripts, LLC and all corporate predecessors, subsidiaries,
successors, and affiliates.
16.

Defendant RelayHealth is a corporation organized under the laws of the State of

Delaware, with its principal place of business at 561145 Sanctuary Parkway, Alpharetta, GA
30009. RelayHealth, a division of McKesson Technologies Inc., is a wholly-owned subsidiary of
McKesson Corporation.

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17.

Defendant Allscripts Healthcare Solutions, Inc. is a corporation organized under

the laws of the State of Delaware, with its principal place of business at 222 Merchandise Mart
Plaza, Suite 2024, Chicago, IL 60654. Except where otherwise specified, “ Allscripts” refers to
Allscripts Healthcare Solutions, Inc. and all corporate predecessors, subsidiaries, successors, and
affiliates.
18.

Defendants’ Co-conspirators: Generally, a pharmacy technology vendor (“PTV”)

only provides a pharmacy with pharmacy software and computer technology that facilitates a
pharmacy’s connection to the Surescripts routing service, other claims adjudication services,
eligibility and benefit network messaging, and clinical messaging systems (among other things).
PTVs design the software conduits that allow pharmacies to access and use Surescripts routing.
Pharmacies pay Surescripts for routing e-prescriptions and are itemized per routing transaction.
19.

However, upon information and belief, some PTV entities joined Defendants’

scheme as co-conspirators, aiders and abettors, and otherwise acted in concert with Defendants
in connection with Surescripts’ monopolization of the e-prescription routing market (“PTV CoConspirators”). Some PTV and health information technology company co-conspirators contract
with Surescripts or RelayHealth to “resell” Surescripts’ e-prescription routing transactions in
return for a cut of the supracompetitive profits. These pharmacy technology vendors and health
information technology companies agreed to de facto or de jure exclusive dealing contracts with
Surescripts and/or RelayHealth and thus expressly entered into anticompetitive agreements
restraining trade and maintaining Surescripts’ monopoly control of the routing market. Routing
prices charged to pharmacies by PTV Co-Conspirators move in lock-step with Surescripts’
prices. Though not all are currently known or named as defendants in this complaint, the PTV
Co-Conspirators are nonetheless complete, voluntary, and substantially equal co-conspirators in

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the furtherance of Surescripts’ anticompetitive scheme. Surescripts requires that all PTVs be
“certified” with Surescripts in order to provide pharmacies with access to the Surescripts routing
network. The PTVs “ certified” by Surescripts include, but are not limited to: Abacus,
AdvanceNet Health Solutions, AMS Visions, AdvancedRx by HealthLink Solutions, Automated
Healthcare Solutions, A-S Medication Solutions, Amis Pharmacy, AmberRx, AIS/Lynx, BDM
Pharmacy, BestRx Pharmacy Software, BioMed Intelligence (BMI) – RxVector, Benecard
Services, Carepoint – GuardianRx, Cerner Etreby, Compusolve, Computer-Rx, Cost Effective –
QuickSCRIP, CPR+, Creehan Company – ScriptMed, Cypress Rx, CpERx, DAA Enterprises,
Data Doc, Inc., Datascan, Digital Business Solutions – Digital Rx, Doctor Dispense, Epic,
EnterpriseRx, Enclara Pharmacia, eRx Network, Foundation Systems Inc. (FSI), HBS Rx, HCC,
InstyMeds, Integra, JASCORP, KeyCentrix, Koogly, Kalos, Lagniappe Pharmacy Services,
LexiCom, Liberty Software, McKesson Pharmacy Systems, MDScripts, Mediware, Micro
Merchant Systems – PrimeRx, 5mRx LLC, NowRx – QuickFill, Omnicare, OPUS-ISM, Pacific
Pharmacy Computers (PPC), Pharmascan, Pharmacy Computer Services (Rx3000), Pharmacy
Systems, Inc., PioneerRx, PK Software, Prodigy Data Systems Inc. – PROscript 2000, Pamlab,
PD-Rx Pharmaceuticals, Pharmacy Data Management, Prime Therapeutics, LLC – RxExpress,
QuiqMeds, QS/1, Retail Data Systems – Easy Rx, RNA – Helix, RS Software, Rx Outreach,
RNA Holdings – Triad Retail Pharmacy System, RxLinc, ScriptPro, Software Strategics, Inc.,
SoftWriters – FrameWorkLTC, Speed Script, SRS, SuiteRx, Supervalu – Arx, ScriptDash –
Wunderbar, StreamCare, THOT, Transaction Data Systems – Rx30, VIP Computer systems,
VendRx, WesCom, and Zadall Pharmacy System. Over 79% of the routing market is controlled
by anticompetitive exclusive dealing Surescripts contracts.

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IV. BACKGROUND
A.

Electronic prescribing consists of two transactions.

20.

E-prescribing is the electronic transmission of prescription or prescription-related

information between a prescriber (through the prescriber’s EHR), a pharmacy, and a payer
(usually a PBM), either directly or through an intermediary.
21.

E-prescribing developed as a safer, more accurate, efficient, and lower-cost means

for prescribers (via their EHRs), pharmacies, and PBMs to communicate and process patient
prescriptions. The benefits of e-prescribing include fewer medical errors due to poor
handwriting, greater awareness of potential adverse drug interactions, more effective
communication of a patient’s insurance coverage and generic alternatives, and increased
adherence (the likelihood that a patient will pick up a prescription at a pharmacy after leaving the
prescriber’s office).
22.

The core e-prescribing services are routing and eligibility. Although these two

services are usually provided to prescribers together in the same prescribing workflow, each
transaction serves a different purpose, delivers different information, and occurs between
different customers.
23.

Routing is the transmission of prescription and prescription-related information

between the prescriber’s EHR and a pharmacy. Routing transactions also include the
transmission of a pharmacy’s request to a prescriber’s EHR for a refill of a prescription.
24.

Eligibility is the transmission of a patient’s formulary and benefit information

from a PBM to a prescriber’s EHR prior to the patient’s appointment. This information allows
a prescriber to know, for example, which drugs are covered by the patient’s drug benefit plan,
the location of covered drugs on a patient’s health insurance company’s formulary, and what

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copay (if any) a patient will have to pay to obtain a prescribed drug. Eligibility also informs
the prescriber of lower-cost alternatives, such as generic drugs.
25.

Each of the routing and eligibility transactions is governed by its own industry-

wide standard created by the National Council for Prescription Drug Programs (“NCPDP”).
There is no patent or other intellectual property protection for either the routing or the eligibility
transactions.
B.

Routing and eligibility are two-sided networks with a “chicken-and-egg
problem.”

26.

Providing routing requires building a two-sided network (or platform) linking

EHRs to pharmacies. Providing eligibility requires building a two-sided network (or platform)
linking EHRs to PBMs.
27.

Two-sided platforms experience what economists refer to as “indirect network

effects.” That means that the value to participants on one side increases when there are more
participants on the other side.
28.

Both routing and eligibility have significant indirect network effects. For routing,

pharmacies get more value from a network that connects to more EHRs because there is a
greater supply of prescribers that can send patients to those pharmacies to purchase the patients’
prescribed drugs. And EHRs get more value from a network that connects to more pharmacies
because prescribers can send prescriptions to more pharmacies, which increases the likelihood that
patients will be able to use their preferred pharmacy.
29.

Similarly, for eligibility, PBMs get more value from a network that connects more

EHRs, as the increased distribution of a PBM’s formulary and benefit information helps more
prescribers prescribe on-formulary drugs and thereby saves PBMs more money. And the EHRs
get more value from a network that connects to more PBMs because EHRs are able to obtain
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more complete insurance benefit information, such as for those patients who have multiple
insurers.
30.

Another feature of many two-sided networks is that customers on one side of the

network will not join the network unless they are confident that they will be able to access
enough customers on the other side and thereby derive enough value from using the network.
Neither side will join unless they believe the other side will. This gives rise to what
economists refer to as the “chicken-and-egg problem.” Solving this coordination problem is
key to developing a viable platform.
31.

Routing and eligibility both face the chicken-and-egg problem, as the industry

itself has observed. For routing, a network is unlikely to persuade EHRs to join the network,
and incur the costs associated with connecting, unless those EHRs believe they will be able to
access a substantial number of pharmacies on that network. And a routing network is
unlikely to convince pharmacies to join the network, and incur the costs associated with
connecting, unless those pharmacies believe they will be able to access a substantial number
of EHRs participating in thatnetwork.
32.

For eligibility, a network is unlikely to persuade EHRs to join the network,

and incur the costs associated with connecting, unless those EHRs believe they will be able
to access a substantial number of PBMs on that network. And an eligibility network is
unlikely to convince PBMs to join the network, and incur the costs associated with
connecting, unless those PBMs believe they will be able to access a substantial number of
EHRs participating in that network.
33.

Creating viable routing and eligibility networks requires solving the chicken-

and- egg problem and providing sufficient value to both sides of these platforms.

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Economists recognize that to solve the chicken-and-egg problem networks must get a
“critical mass” of customers on both sides to sign up. If a network cannot get a critical mass
on both sides, then it is unlikely to be able to operate a viable platform.
34.

In its submissions to the FTC, Surescripts has acknowledged that the chicken-

and- egg problem exists as a barrier to entry in each of the markets for routing and
eligibility.
35.

When a new platform starts, it can achieve critical mass either by getting

customers who have not signed on to any platform or by getting customers from an
existing platform. Customers of an existing platform face less cost and risk when they can
use both their current platform and the new platform. Economists refer to the use of
more than one platform simultaneously as “multihoming.” Multihoming is common and
new platforms routinely rely on multihoming to enter and compete with existing
platforms.
36.

Nearly all routing and eligibility customers use Surescripts’s platform, so

competitors in general must compete for customers already using Surescripts’s routing and
eligibility platforms. Because customers often prefer to avoid the cost and risk of a complete
switch to an entrant, the entrant is most likely to win business through multihoming, i.e.
utilize companies or platforms other than Surescripts. Customers want to multihome because
it encourages price competition and innovation in e-prescribing, and a small handful do
multihome. As alleged below, Surescripts intentionally set out to substantially increase all
routing and eligibility customers’ costs to multihome, significantly elevating the critical mass a
Surescripts competitor would need to become a viable network in either routing or eligibility.

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Absent Surescripts’s conduct, entrants in routing and/or eligibility would have used multihoming
to overcome the chicken-and-egg entry barrier through normal, market-based competition.
C.

Due to federal policies and incentives, the e-prescribing industry has
experienced extraordinary growth.

37.

In 2008, there had been limited adoption of e-prescribing by prescribers. Congress

thus acted twice to encourage expansion of e-prescribing and its many benefits.
38.

First, on July 15, 2008, Congress passed the Medicare Improvements for

Patients and Providers Act (“MIPPA”). MIPPA, through regulations implemented by the
Centers for Medicare and Medicaid Services (“CMS”), adopted a carrot-and-stick approach
to encourage prescribers to e-prescribe. As the carrot, MIPPA provided financial incentives
to prescribers equivalent to a reimbursement bonus based on the prescriber’s total charges
for professional services to Medicare and Medicaid. As the stick, MIPPA established
penalties in the form of reduced Medicare and Medicaid reimbursements to prescribers if a
prescriber was not a “successful electronic prescriber.” To be considered a successful
electronic prescriber under MIPPA, a prescriber must use an EHR that, among other things,
allows the prescriber to obtain eligibility information and “electronically transmit
prescriptions” for a specified fraction of total prescriptions.
39.

Second, on February 17, 2009, Congress passed the Health Information

Technology for Economic and Clinical Health Act (“HITECH Act”), which further expanded the
regulatory regime CMS implemented to grow e-prescribing. The HITECH Act encourages the
“meaningful use” of EHRs throughout the United States. It does so by authorizing carrot-andstick financial incentives and payment reductions to prescribers depending on whether they
“meaningfully used” EHR technology. Through today, CMS has paid out over $38 billion in

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meaningful use financial incentives, which does not account for the effect of the potential
penalties.
40.

One meaningful use objective is the ability to “[g]enerate and transmit

prescriptions electronically.”
41.

To prescribe electronically-and thus obtain the financial incentives and later

avoid penalties described above-prescribers (via their EHRs) need to connect to pharmacies
and PBMs.
42.

From 2008 to 2016, the number of routing and eligibility transactions grew over

23-fold, from 147 million to 3.5 billion, and the percentage of U.S. physicians e-prescribing
grew to nearly 70%. In 2017, 77% of all prescriptions were delivered electronically.
43.

This growth was primarily driven by MIPPA and the HITECH Act.

Surescripts agrees, writing in 2014, “[w]e believe the dramatic growth in adoption and use [of
e-prescribing] is a function of the combined forces of federal financial incentives and an
aggressive response by the technology sector.” As Surescripts’s former CEO Harry Totonis
testified, “meaningful use totally helped e-prescribing happen.”
D.

Surescripts was well positioned to capitalize on e-prescribing’s explosive
growth.

44.

Surescripts, LLC was formed on May 9, 2008, through a cashless merger of two

companies: Rx.Hub LLC (“Rx.Hub”) and SureScripts Systems, Inc. (“SureScripts Systems”).
The merger was not reportable under the Hart-Scott-Rodino Act and neither the U.S.
Department of Justice nor the FTC reviewed the merger.
45.

Rx.Hub was the first major eligibility network. It was formed by three PBMs in

February 2001.

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46.

Six months later, in response to RxHub’s formation, two pharmacy trade groups

formed SureScripts Systems. SureScripts Systems primarily focused on routing.
47.

As a result of the merger, Surescripts possessed at least 95% of the routing

market (by transaction volume) and at least 95% of the eligibility market (by transaction
volume).
48.

Surescripts is currently owned by CVS Health (“CVS”) (17%) (a pharmacy and

PBM), Express Scripts (33%) (a PBM), the National Association of Chain Drug Stores (25%)
(a trade association), and the National Community Pharmacists Association (25%) (a trade
association).
49.

No EHR or prescriber has an ownership interest in Surescripts.

50.

No pharmacy or PBM, other than CVS and Express Scripts, has a direct

ownership interest in Surescripts.
51.

No pharmacy, PBM, or EHR has a controlling interest in Surescripts.

52.

Surescripts provides connections between EHRs, pharmacies, and PBMs for

routing and eligibility.
53.

Surescripts charges pharmacies (either directly or indirectly via a reseller or other

third-party intermediary, such as a pharmacy technology vendor (“PTV”)) a fee for each routing
transaction and charges PBMs a fee for each eligibility transaction.
54.

In 2016, Surescripts received routing and eligibility fees from pharmacies,

PBMs, and intermediaries, which accounted for a substantial part of its revenue.
55.

Surescripts pays EHRs a fee for each routing and eligibility transaction, but only

if the EHR uses Surescripts exclusively. The industry commonly refers to these disbursements as
“incentive payments.”

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56.

In 2016, Surescripts made incentive payments to EHRs.

57.

Surescripts follows the NCPDP standards for routing and eligibility transactions.

58.

Surescripts creates and manages its own certification processes for its network,

which means that customers (i.e., EHR.s, pharmacies, PBMs, and intermediaries) must obtain
certification from Surescripts and sign a contract before they can use Surescripts’s network.
V. ANTICOMPETITIVE CONDUCT
59.

In 2009, Surescripts, with its extensive connectivity toe-prescribing stakeholders

was well positioned to benefit from enormous growth in routing and eligibility, which was
catalyzed by MIPPA, the HITECH Act, CMS regulations, and a broader movement towards
computerizing health records. Surescripts foresaw a vast, open, and untapped market. However,
other companies saw the same potential.
60.

Surescripts faced substantial competitive threats to its routing and eligibility

monopolies and was concerned that competition would drive the “commoditization” of routing
and eligibility, reduce prices for each, and “devastate” Surescripts’s cash flow.
61.

In late September 2009, Surescripts’s management explained to its board of

directors that these “competitive pressures require precipitous price drops, down near or
below our average unit costs (-5c)” and that, should Surescripts “lose 2-3 midsize pharmacy
customers or a large PBM” to a competitor, “Surescripts would not be financially viable.”
62.

To prevent lower prices from competition, Surescripts substantially raised

nearly all its customers’ costs to multihome, rendering the chicken-and-egg problem insoluble
for a competitor. The result has been the total exclusion of all meaningful competition in
routing and eligibility, higher prices, reduced innovation, lower output, and no customer
choice.

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A.

Surescripts learns of an emerging threat to its monopolies.

63.

On July 1, 2009, a health information technology company called Emdeon

(n/k/a eRx Network) acquired eRx Network, a competing routing network. Although eRx
Network only transmitted approximately 5% of routing market transactions at that time, it
was well positioned for significant growth as eRx Network maintained connectivity with
Allscripts, a large EHR, and PDX, a PTV providing routing connectivity that marketed
primarily to medium-to-large sized retail pharmacy chains.
64.

Surescripts recognized that competition from Emdeon would “drive lower

prices.”
65.

On July 22, 2009, Surescripts’s Chief Strategy Officer, Scott Barclay,

explained that with “lower prices and further capabilities, the new Emdeon could
significantly compete” with Surescripts.
66.

If Emdeon could provide lower prices to pharmacies, higher incentives to

EHRs, or both, Emdeon could attract enough customers to its routing network and solve the
chicken- and-egg problem. Surescripts understood that if additional customers were to
multihome with Emdeon, “[t]hen it becomes a price game at pharmacy and an incentive
game at the POC [point of care, i.e., prescribers/EHRs]....[E]ach network fights for itself and
the market share game becomes paramount quickly.”
67.

Surescripts thus acted to eliminate the outbreak of competition-an outcome

where one set of customers (pharmacies and PBMs) would pay lower prices, another set
of customers (EHR.s) would receive higher incentive payments, but Surescripts would
lose its supracompetitive profits.

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B.

Surescripts responds to competition by devising and implementing an
anticompetitive web of exclusive contracts.

68.

In response to the threat from Emdeon and other competitors, Surescripts, with its

95%-plus established share in both markets, sought to eliminate all competition by significantly
raising its customers’ costs to multihome, thereby dramatically increasing the critical mass
necessary for a Surescripts competitor to become viable. Surescripts did so by blanketing the
markets for routing and eligibility with loyalty pricing and exclusivity contracts.
69.

Beginning in mid-2009, Surescripts devised a scheme to include “loyalty”

provisions in contracts with customers on both sides of the routing and eligibility markets,
which conditioned discounts or payments on actual or de facto exclusivity. Loyalty discounts
apply to Surescripts’s pharmacy, PTV, and PBM customers. Loyalty payments apply to
Surescripts’s EHR customers.
1. The structure of Surescripts’s pharmacy, PTV, and PBM contracts.
70.

For pharmacies and PTVs to receive a loyalty discount, a customer must deal

exclusively with Surescripts. To be considered exclusive, Surescripts requires that a pharmacy
and PTV customer route 100% of its transactions “through and only through the Surescripts
network.” This requirement only applies to Surescripts-connected entities. Because Surescripts
maintains connectivity to nearly all EHRs, this provision effectively requires 100% exclusivity
from pharmacies and PTVs. Surescripts generally refers to these exclusive customers as
“loyal” customers and those that are not exclusive as “non-loyal.”
71.

The same eligibility structure exists for PBMs.

72.

Under these loyalty provisions, because pharmacies, PTVs, and PBMs must use

Surescripts for all or nearly all of their transactions, becoming non-exclusive and losing the
loyalty discounts results in a significant cost increase. Surescripts’s loyalty pricing scheme
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therefore substantially increases the cost of multihoming through a second network for
nearly all pharmacies, PTVs, and PBMs. Though the difference in the per-transaction price
between a loyal and non-loyal transaction is often a few pennies, many pharmacy chains and
PBMs send millions of transactions across the Surescripts network and a difference of a few
pennies results in hundreds of thousands or even millions of dollars in cost increases.
73.

These non-loyal per-transaction prices (which are additional costs to

customers) are not justified by any increased costs faced by Surescripts in transmitting
routing or eligibility information. Rather they exist only to act both as penalties to those
customers that may consider being non-loyal to Surescripts and as an exclusionary tactic
against any competitor in routing or eligibility, thus reinforcing and maintaining
Surescripts’s monopolies in routing and eligibility.
74.

In many contracts, Surescripts also requires customers to pay the price

differential between the loyal and non-loyal price for historical transaction volume
retroactive over the term of the contract. For many customers, these additional clawback
obligations total millions of dollars and substantially strengthen the lock-up effect of the
contracts.
75.

Surescripts refers to these clawback provisions as the “teeth” of its loyalty

contracts.
76.

For example, as the FTC has uncovered, Exhibit Two (A) of Surescripts’s

September 28, 2010 contract with a PTV provides an illustrative example of the “teeth” of
Surescripts’s contracts:
If, during the Loyalty Term, Aggregator [i.e., PTV] ceases to route all of its
electronic Prescription Routing messages to Prescribing Participants through,
and only through, the Surescripts network and fails to cure within the applicable
cure period, then Surescripts shall immediately cease calculating the Loyalty
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Discount and Aggregator agrees to pay Surescripts the amount of the Loyalty
Discount received by Aggregator during the Loyalty Term.
77.

Similarly, Surescripts’s June 2, 2010 contract with PBM customer provides:

If, during the Loyalty Term, PBM ceases to route all of its electronic Prescription
History and Benefit (Ambulatory) messages to Participants through, and only
through, the Surescripts network, then Surescripts shall immediately cease applying
the Loyalty Eligibility Transaction Fee price and PBM agrees to pay Surescripts
the difference in the amount of Transaction Fees PBM would incur had PBM paid
the [non-loyal price] versus the [loyal price] as of the Amendment Effective Date.
2. The structure of Surescripts’s EHR contracts.
78.

Surescripts imposes the same loyalty scheme on EHRs, except in reverse by

conditioning any incentive payments on an EHR’s exclusivity to Surescripts for routing,
eligibility, or both.
79.

Under the EHR loyalty program as implemented for most EHRs, if an EHR

agrees to be exclusive only in routing, Surescripts pays the EHR an incentive fee tied to the
routing fee paid by pharmacy customers to Surescripts for each routing transaction. If an EHR
agrees to be exclusive only in eligibility, Surescripts pays the EHR an incentive fee tied to the
eligibility fee paid by PBM customers to Surescripts. If the EHR agrees to be exclusive in both
routing and eligibility, Surescripts pays the EHR a higher incentive fee on both transactions.
Nearly all EHRs participating in the loyalty program agree to exclusivity on both transactions.
80.

If an EHR decides to multihome and use Surescripts for less than 100% of its

transactions, Surescripts terminates incentive fees to that EHR. In other words, Surescripts
raises the EHR’s price by reducing the EHR’s incentive fees to zero. As with the penalty price
Surescripts charges non-loyal pharmacies, PTVs, and PBMs, there are no legitimate competitive
reasons (e.g., increased costs) for Surescripts to raise its EHR price to zero for non-loyal EHRs.

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81.

As with its clawback provisions to pharmacies, PTVs, and PBMs, Surescripts

also requires the EHR to pay back the incentive fees for historical transaction volume if the
EHR violates the exclusivity commitment. Some contracts require repayment on transactions
over the full term of the contract. For example, Surescripts’s April 14, 2010 contract with EHR
provides:
If, during the Loyalty Term, Surescripts determines that Aggregator [i.e., the EHR] has
failed to comply with the loyalty requirements . . . Aggregator shall promptly pay back to
Surescripts the amount of Incentive Fees paid by Surescripts to Aggregator during the
Loyalty Term, and Aggregator shall no longer receive the Incentive Fees.
3. Surescripts structured the contracts to lock up the routing and eligibility
markets.
82.

Surescripts implemented loyalty pricing and exclusivity requirements to make

the chicken-and-egg problem insurmountable for any competitor in either routing or
eligibility (or both). Specifically, Surescripts’s loyalty program substantially raises its
customers’ costs to multihome, significantly elevating the critical mass a competing platform
would need to become viable, rendering the chicken-and-egg problem insoluble. As
Surescripts explained in a presentation to its board, the new loyalty strategy would
“[p]rotect [Surescripts’s] most critical asset-[its] network-by addressing competitive market
pressures and locking-in key customers.”
83.

Nearly all of Surescripts’ s loyalty pricing and exclusive contracts in both routing

and eligibility have an initial term of three years or more. With some larger customers, the terms
are as long as five years.
84.

Surescripts prefers to employ long-term contracts because they enable

Surescripts to lock up its customers, preventing them from using a competitor’s network. As
Surescripts’s then-Vice President of Account Management explained in a February 2010

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email to the company’s then-CEO, “[o]ur 3 year commitments keep[] our competition out of
those customers.”
85.

Nearly all of Surescripts’s loyalty pricing and exclusive contracts in both routing

and eligibility automatically renew for one year unless either party gives notice.
86.

In early 2010, as demand for routing and eligibility was growing and inviting

entry, Surescripts began executing loyalty pricing with nearly all of its e-prescribing customers.
Most of these contracts had an effective date retroactive back to January 1, 2010.
C.

Surescripts and RelayHealth reject competition and entered into agreements
to join forces and share Sunscripts’ monopoly profits to extend the reach of
its exclusive contracts and solidify its monopolies.

87.

While Surescripts was able to push its loyalty pricing and exclusive contracts onto

its direct customers, Surescripts was only able to lock up customers with whom Surescripts had a
direct contract. But Surescripts was also concerned about a large subset of customers that it did
not have direct contracts with (and thus did not have exclusivity commitments from)-namely
those customers that connected to Surescripts through RelayHealth.
88.

RelayHealth is a health information technology company that is a subsidiary of

McKesson. Since 2003, RelayHealth has contracted with Surescripts to resell the routing
transaction to a subset of pharmacy and PTV end-customers. RelayHealth contracts with these
pharmacies and PTVs, but Surescripts does not. RelayHealth also provided Surescripts’s
routing connectivity to some EHRs until 2015, but it no longer does so except for EHRs
associated with McKesson.
89.

Surescripts sells the routing transaction to RelayHealth at a “wholesale” rate.

RelayHealth then resells the transaction to a subset of pharmacies and PTVs at a higher
“retail” rate. RelayHealth profits from the margin between the retail rate pharmacies and

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PTVs pay RelayHealth and the lower wholesale rate RelayHealth pays to Surescripts. All else
equal, the lower Surescripts’s wholesale rate to RelayHealth, the higher RelayHealth’s
margin.
90.

Through two contracts, one executed in 2010 and a second executed in 2015,

Surescripts provided RelayHealth with contractual and monetary incentives to convince
RelayHealth’s routing customers to be loyal to the Surescripts routing network.
91.

In the February 25, 2010 contract (“the 2010 contract”) between Surescripts and

RelayHealth, RelayHealth was required to use “commercially reasonable efforts to offer terms to
incentivize exclusive use of the Surescripts network” by pharmacies, PTVs, and EHR.s and to
assist Surescripts in clawing back any incentive fees from EHRs.
92.

Under the 2010 contract, if a RelayHealth customer maintained exclusivity to

Surescripts, Surescripts discounted its wholesale price to RelayHealth for that customer.
Pursuant to the 2010 contract, RelayHealth entered into contracts with its pharmacies and PTVs
for routing through the Surescripts network. Nearly all of these contracts went beyond the
Surescripts requirement and mandated that these customers use RelayHealth exclusively (i.e.,
for 100% of their required transactions). Because RelayHealth was exclusive to Surescripts, this
provision resulted in nearly all of RelayHealth’s pharmacy and PTV customers routing all of
their transactions through Surescripts. As an October 2012 RelayHealth presentation put it,
RelayHealth’s strategy was to “[m]ove non-exclusive customers to exclusive wherever
possible.”
93.

RelayHealth also provided Surescripts with feedback as to RelayHealth’s

customers’ exclusivity status. For example, in 2012, Surescripts instructed RelayHealth to

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inquire into the loyalty status of a routing customer called Transaction Data Systems d/b/a
Rx30 (“Rx30”). RelayHealth did so and informed Surescripts that Rx30 was not loyal.
94.

Under the 2010 contract, RelayHealth also entered into contracts with EHRs for

routing through the Surescripts network. These contracts were typically for a length of two
years or more, contained express exclusivity requirements to RelayHealth, and provided
incentive payments to EHRs only if an EHR was 90-100% exclusive to the Surescripts
network. Again, because Surescripts was the only routing network to which RelayHealth
provided access, this provision resulted in nearly all of RelayHealth’s EHR customers routing
all of their transactions through Surescripts. For each exclusive routing transaction,
Surescripts paid RelayHealth an incentive payment. RelayHealth then passed a portion of
those incentives on to its EHRs, but only if they met RelayHealth’s exclusivity requirements.
95.

RelayHealth’s contracts with EHRs also required repayment of all incentive fees

paid to the EHR if the EHR failed to comply with RelayHealth’s exclusivity requirement.
96.

In the next contract, signed on January 16, 2015 (“the 2015 contract”),

Surescripts renewed its 2010 contract with RelayHealth with modifications. The contract
provided RelayHealth with a higher wholesale discount for exclusive transactions; increased
the loyalty threshold, instead of determining loyalty on a customer-by- customer basis,
determined loyalty on a platform-wide basis.
97.

As explained in more detail below, the 2015 contract also required RelayHealth to

transfer its EHR connections to Surescripts. RelayHealth therefore no longer provides routing
connectivity to EHRs, except for EHRs associated with McKesson.
98.

Under the 2015 contract, RelayHealth has not changed its contracts with its end-

user pharmacy and PTV customers to resell Surescripts’s routing connectivity. Thus,

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RelayHealth’s contracts for Surescripts’s routing network continue to require 100%
exclusivity through today.
D.

Surescripts Colludes with Allscripts to Exclude Routing Competitor
Emdeon.

99.

While implementing this web of loyalty and exclusive contracts, Surescripts

devoted special attention and resources to locking up a critical EHR: Allscripts. In 2009,
Allscripts represented approximately 25% of Surescripts’s routing and eligibility
transactions, making it a significant customer for any e-prescribing network. Allscripts’s
EHR technology relied on a centralized “hub” infrastructure for all of its customers,
meaning that if Allscripts multihomed with an additional e-prescribing network, the added
e-prescribing network could quickly route e-prescriptions to and from Allscripts’s entire eprescribing customer base. Allscripts’s exclusivity was critical to Surescripts two reasons:
(1) Allscripts was one of the few EHRs that was multihoming, using Emdeon as an
alternative routing network to Surescripts, which made Emdeon a more viable threat to
Surescripts; and (2) Allscripts had implemented a new business model in eligibility that cut
out Surescripts as the middleman.
100.

First, Allscripts had contracted with Emdeon for routing since 2007. This

connection allowed Allscripts to route prescriptions to Emdeon’s pharmacy customers
without utilizing the Surescripts network. Emdeon paid Allscripts a routing transaction
incentive fee that was higher than what Surescripts paid Allscripts.
101.

Surescripts recognized that Allscripts was crucial to Emdeon gaining scale in

routing, overcoming the chicken-and-egg problem, and offering increased competition and
lower prices. Access to Allscripts’s routing transaction volume (through its prescribers)
made Emdeon more attractive to potential pharmacy customers. In a November 17, 2009
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email, a senior Surescripts executive wrote that in order to prevent Emdeon from solving the
chicken-and-egg problem, “[t]he key to Emdeon is Allscripts[] (i.e., the key to fighting eRx
networks [Emdeon] is containing their access to POC [point of care, i.e., prescribers]).”
102.

Second, in September 2009, before Surescripts implemented its loyalty and

exclusive contracts, Surescripts learned that Allscripts was transmitting eligibility requests
around Surescripts’s network directly to a PBM called SXC Health Solutions. This practice of
developing “direct connections” for eligibility with PBMs represented a different means for
Allscripts to receive eligibility information from PBMs and, more broadly, a different model for
e.-prescribing, one that cut out Surescripts as a middleman. From Surescripts’s perspective,
Allscripts’s development of direct connections to PBMs made Allscripts “a major competitor and
our largest current risk” in eligibility.
103.

By May 2010, Allscripts sold or was attempting to sell direct connections to

its prescriber network to at least six PBMs, often at prices below Surescripts’ s.
104.

For example, Allscripts charged at least one PBM a per-transaction price that

is lower than what that same PBM was paying to Surescripts for the same eligibility
transaction.
105.

PBMs hoped their relationships with EHRs would create a more competitive,

innovative market that would exert pressure on Surescripts to innovate. Many customers
have complained that Surescripts’s eligibility transaction is “not a reliable process” because
it provides only static, non-patient specific formulary information.
106.

Surescripts realized that Allscripts’s direct eligibility connections were “a long-

term potential threat[] coming true.”

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107.

Facing these threats, Surescripts implemented a “full combat strategy” to “lock up

. . . Allscripts” through an exclusive contract with Allscripts, which Allscripts and Surescripts
signed on May 31, 2010.
108.

As the preamble to that contract states, “the purpose of this [agreement] is

to enter into a long term arrangement for [Allscripts] to utilize Surescripts exclusively”
for both routing and eligibility.
109.

The 2010 contract had a term of four years and included several provisions

tailored specifically to Allscripts to ensure exclusivity from Allscripts for both routing and
eligibility.
110.

First, Surescripts required Allscripts to terminate its routing connection to

the Emdeon network at the expiration of Allscripts’s contract with Emdeon in June
2013. Allscripts, despite its objections, agreed to this requirement to avoid losing access
to Surescripts’s network. Surescripts’s network is a “must-have” for nearly all EHRs
because EHRs must connect to pharmacies and PBMs to e-prescribe. Allscripts
terminated its relationship with Emdeon on June 20, 2013.
111.

Second, Surescripts grandfathered in Allscripts’s current direct connections

with PBMs but prohibited Allscripts from renewing its eligibility contracts with those PBMs
and from proactively marketing or entering into new eligibility agreements with PBMs.
112.

Third, Surescripts imposed a “right of first refusal” procedure on

Allscripts’ s e- prescribing business: If any third party sought to do business with
Allscripts in either routing or eligibility, Allscripts was required to set up a meeting with
Surescripts and that third party “to facilitate a connection between such [third party] and
Surescripts.” Only if the third party did not want to do business with Surescripts after this

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meeting could Allscripts engage in business discussions with the third party for routing or
eligibility.
113.

Fourth, Surescripts required Allscripts to remind its sales and business

development personnel annually of the above terms, and Surescripts maintained the right to
“review and comment” on such annual reminders.
114.

Surescripts realized that Allscripts was key to crushing Emdeon’s ability to

expand and quashing any alternative e-prescribing business model via Allscripts’s direct
connections to PBMs. Surescripts thus provided Allscripts with “enhanced” or “relatively more
attractive revenue sharing.” Specifically, Surescripts paid Allscripts an incentive tied to the
routing and eligibility fees paid by pharmacy and PBM customers for each transaction,
substantially more than similarly situated EHRs. One slide from an internal Surescripts
presentation, reproduced below, described an early version of its 2010 deal with Allscripts by
including a picture of the movie poster from the 2009 film “The Proposal,” which included the
slogan “HERE COMES THE BRIBE.”
115.

In the five years following the execution of the contract, Surescripts paid

Allscripts substantial amounts in incentives for routing and eligibility.
116.

In 2014, though Surescripts had successfully pressured Allscripts into severing its

routing connection with Emdeon, Surescripts still worried that Allscripts would restart
multihoming, using Emdeon as an alternative, which would, in the words of Greg Hansen,
Surescripts’ s then- Executive Vice President and Chief Customer Officer, “create what is
essentially a bidding war for [Allscripts’s prescribers’] transactions or access to their physician
community.”

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117.

To stifle this “bidding war” Surescripts engaged in a renewed campaign to force

Allscripts into exclusivity.
118.

In the second half of 2014, Surescripts threatened to withhold Allscripts’s

access to Surescripts’s “must-have” e-prescribing network for routing and eligibility.
Allscripts in tum feared that “Surescripts would have cut us off’ if Allscripts did not sign a
new exclusive agreement with Surescripts.
119.

During the same time period, to secure Allscripts’s exclusivity, Surescripts

also threatened (1) to bar Allscripts from using eligibility information obtained from
Surescripts’s network for Allscripts’s electronic prior authorization transactions, which
increases efficiency between prescribers and pharmacies by reducing the time it takes to
receive pre-approval for certain prescription drugs from a patient’s insurer; (2) to cut
Allscripts off from Surescripts’s pharmacy directory, which is necessary to allow a
prescriber to locate a patient’s preferred pharmacy; and (3) to sever Allscripts’s access to a
separate service called medication history, which Allscripts’s prescribers used in both acute
and ambulatory settings.
120.

Surescripts also sought to impose a penalty on Allscripts by making Allscripts pay

millions of dollars if Allscripts did not enter into an exclusive agreement. For example,
Surescripts sent Allscripts retroactive invoice for Allscripts’s use of what was supposed to be a
separate free service offered by Surescripts if Allscripts did not agree to the exclusivity terms
Surescripts had proposed. Surescripts also withheld loyalty incentive payments to Allscripts until
Allscripts signed the contract.
121.

Surescripts referred to these tactics as “nuclear missile[s]” and admitted

they were designed to ensure that Allscripts would continue to use Surescripts

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exclusively. Both Surescripts and Allscripts understood that these tactics were meant to
“exert leverage” over Allscripts to force it to sign an exclusive agreement for routing
and eligibility.
122.

During this same period, Emdeon again attempted to sign Allscripts up as a

customer by, for example, offering Allscripts increasingly large up-front payments and
profit- sharing arrangements to compensate Allscripts for losing Surescripts’ s incentive
fees.
123.

Despite Emdeon’s efforts, Surescripts’s tactics with Allscripts were

successful. On January 31, 2015, Allscripts signed a new amendment with Surescripts,
extending the term of the underlying exclusive contract for five years.
124.

On June 29, 2018, after Surescripts became aware that the FTC was

investigating its conduct, Allscripts and Surescripts entered into a new amendment that
deleted some of the more restrictive provisions contained in the 2010 Allscripts-Surescripts
agreement and the 2015 amendment. That 2018 amendment, however, did not alter the fact
that Allscripts was still required to use Surescripts exclusively for routing and eligibility or
face financial penalties.
E.

Defendants’ scheme has succeeded in excluding all meaningful competition
from both routing and eligibility.

125.

Over the last 10 years, Emdeon attempted unsuccessfully to expand its

presence in the routing market and, later, in the eligibility market. Beginning in 2009,
Emdeon attempted to convince pharmacies and EHRs to use its network to route
transactions, circumventing the Surescripts network. Doing so would require these
pharmacies and EHRs to become non-loyal to Surescripts or RelayHealth and pay back the
discounts or incentive payments pharmacies and EHRs already received. In many cases,
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Emdeon approached these potential customers with lower 28 per-transaction pricing than
Surescripts charged, higher per-transaction incentive payments than Surescripts paid, and no
loyalty requirements.
126.

However, Emdeon was not successful. Many pharmacies and EHRs refused to

connect to Emdeon, since doing so would trigger the massive penalty provisions in their
contracts with Surescripts or RelayHealth and cost routing customers millions of dollars through
increased prices or, for EHRs, decreased incentive payments. Because Emdeon could not expand
its connectivity, it could not deliver low enough pricing on a high enough volume of transactions
to make up for the huge penalties inflicted on any pharmacy or EHR that chose to become nonloyal to Surescripts. There was no price (or incentive payment) that Emdeon could offer that
would offset the penalty customers would receive by becoming non-loyal to Surescripts.
127.

Surescripts executives knew that its loyalty scheme was working as intended.

They repeatedly admitted that Surescripts’s web of exclusive contracts quashed any
competitive threat. As Surescripts explained to a RelayHealth pharmacy end customer, Rite
Aid, in early 2010, because of the loyalty scheme there was no price Emdeon could offer that
would reduce Rite Aid’s total routing costs:

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128.

In the above slide, Surescripts explained to Rite Aid how its loyalty scheme

disrupted the price-setting mechanism of the routing market.
129.

In September 2010, Surescripts articulated how its exclusive contracts restricted

Emdeon’s expansion and reduced its potential to reach critical mass:
Surescripts’s efforts to lock in our customers through Loyalty programs have
likely had a strong impact to Emdeon’s initial strategy. With most top
Prescriber Vendors signed to Loyalty Incentive plans, and, a significant portion
of the Pharmacy industry signed to Loyalty pricing plans (direct and via
[RelayHealth]), Emdeon’s ability to expand their direct connection to
prescribers and pharmacies has been greatly reduced. Emdeon’s ability to
rapidly become a full national alternative to Surescripts is diminished.

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130.

In October 2010, a Surescripts vice president wrote ‘‘the loyalty/incentive

strategy and execution made a very effective counter to the Emdeon/eRX acquisition. It[’]s
nice when a plan comes together.”
131.

In that same month, Surescripts described how its loyalty program foreclosed

Emdeon from the market by disabling Emdeon’s ability to compete on price: “eRx/Emdeon
can undercut Surescripts on price, but only on a margin of volume ... and Surescripts pricing
differential on pharmacy side and loyalty incentive program on POC side are worth more
than eRx I Emdeon’s proposition on <10% of scripts.”
132.

When Emdeon’s initial efforts to expand failed, Emdeon attempted a new

strategy designed to work around Surescripts’s massive financial penalty provisions.
Emdeon resells the Surescripts routing transaction to a group of pharmacies that use a PTV
called PDX. Emdeon sought to gain critical mass on the EHR side. With the PDX
pharmacies disconnected from the Surescripts network, EHR.s would be free to route
directly to Emdeon without incurring Surescripts’s penalties for being non-loyal. This is
because under Surescripts’s contracts with EHRs, EHRs would not be penalized for routing
to a pharmacy that could not be reached using the Surescripts network. Despite an organized
campaign to attempt to sign up EHRs to contingent contracts (where the EHR would agree
to route through Emdeon only if Emdeon disconnected its pharmacies from the Surescripts
network), Emdeon was unable to execute enough contracts to obtain enough scale to
become viable in e-prescribing and solve the chicken-and-egg problem. In the midst of this
campaign, Allscripts severed its connection with Emdeon, as required by Allscripts’s 2010
agreement with Surescripts, a move Emdeon described as a “devastating” blow, and one that
pushed Emdeon almost completely out of the market.

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133.

In late 2013, Emdeon again attempted to compete with Surescripts, this time

in eligibility. Emdeon approached potential PBM customers with lower pricing than
Surescripts as well as offers to innovate in ways that would respond to PBM complaints
regarding the quality of Surescripts’s eligibility service. Although Emdeon gained some
traction, it ultimately could not acquire the critical mass of PBMs and EHR.s needed to
overcome Surescripts’s loyalty provisions.
VI. SURESCRIPTS POSSESSES MONOPOLY POWER IN EACH
RELEVANT MARKET
A.

The relevant markets.

134.

There are two relevant product markets: (1) routing transactions; and (2)

eligibility transactions.
135.

Other means of transmitting routing and eligibility information (e.g., paper,

phone, fax) are not reasonably interchangeable with electronic prescribing because of safety
concerns and greater efficiencies associated with electronic prescriptions, as well as the
requirements of MIPPA, the HITECH Act, and HHS regulations.
136.

The relevant geographic market is the United States. Large pharmacy chains,

EHRs, and PBMs that make up nearly all of routing and eligibility transactions have nationwide
reach. Surescripts’s customers enter into contracts with nationwide reach, and prices and contract
terms are set at a national level. Federal laws and regulations that govern e-prescribing i.e.,
MIPPA, HITECH, and associated CMS regulations, operate on a national level, further
supporting a national geographic market.
137.

Thus, the relevant markets in which to evaluate Surescripts’s conduct are (1)

routing transactions in the United States; and (2) eligibility transactions in the United States.

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B.

Surescripts possesses monopoly power in the relevant markets.

138.

Surescripts possesses durable monopoly power in each relevant market.

139.

Surescripts has possessed monopoly power in each relevant market from 2009 to

present.
140.

There is substantial direct evidence that Surescripts possesses monopoly power.

141.

Direct evidence of Surescripts’s monopoly power includes its demonstrated

ability to control price in each relevant market.
142.

Surescripts has the ability to price substantially higher than its competitors in

the routing market without losing customers. This includes both prices to pharmacies and
incentives to EHRs.
143.

Surescripts has the ability to price substantially higher than its competitors in

the eligibility market without losing customers. This includes pricing to PBMs and
incentives to EHRs.
144.

Other direct evidence of Surescripts’s market power includes the lack of any

meaningful competition in either routing or eligibility from 2009 to the present. For
example, when Surescripts refused to do business with a customer called
PrescribersConnection in 2015, that customer was left with nowhere else to turn and as a
result has had its e-prescribing functionality permanently disabled-a situation that persists
today. Surescripts’s customers agree that there are “no 1-1 alternatives to Surescripts,” that
Surescripts is a “must-have” network and a “monopolist for a key service.”
145.

There is substantial indirect evidence that Surescripts possesses monopoly

power.

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146.

Surescripts possesses extremely high market shares in both relevant markets.

Surescripts possesses at least 95% market share in the market for routing (by transaction
volume). Surescripts possesses at least 95% market share in the market for eligibility (by
transaction volume). As one Surescripts vice president put it in 2015: “We are a Monopoly
when it comes [to] Prescription Routing.” Even if routing and eligibility were to be
considered part of the same market, Surescripts’s own then-Executive Vice President and
Chief Customer Officer testified that Surescripts’s market share in both products is “[l]ikely
north of 90 percent.”
147.

The markets for routing and eligibility are characterized by barriers to entry in

the form of the chicken-and-egg problem, which Surescripts’s conduct has rendered
unsolvable.
VII. SURESCRIPTS’S ANTICOMPETITIVE COURSE OF CONDUCT
HARMED COMPETITION AND CONSUMERS
148.

Surescripts’ s anticompetitive course of conduct has resulted in the total exclusion

of any meaningful competition in e-prescribing, repeated threats to customers to force
exclusivity, higher prices, reduced innovation, and lower output.
A.

Surescripts’s conduct forecloses each market from all meaningful
competition, eliminating consumer choice.

149.

Surescripts, whether directly or indirectly via RelayHealth, successfully imposed

loyalty requirements on nearly all of its pharmacy and PTV customers. By January 2011,
Surescripts had loyalty contracts with at least 78% of the pharmacy side of the routing market
(by transaction volume), including contracts with major pharmacies such as CVS, Walgreens,
Walmart, and Rite Aid. Nearly all of the loyalty contracts with these pharmacies have been
renewed or amended with similar loyalty provisions, and they remain in place today. Currently,

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Surescripts, whether directly or indirectly via RelayHealth, has loyalty contracts with at least
79% of pharmacy routing transaction volume. These contracts therefore foreclose nearly 80% of
the pharmacy side of the routing network from potential competition. The result is to make
multihoming substantially more expensive for customers, rendering the chicken-and-egg
problem insoluble for Surescripts’s competitors.
150.

Surescripts also imposed loyalty requirements on nearly all of its PBM customers.

By October 2011, Surescripts had exclusivity contracts with at least 74% of the PBM side of the
eligibility market (by transaction volume), including contracts with major PBMs such as Express
Scripts, CVS, and Medco. Nearly all of the loyalty contracts with these PBMs have been
renewed or amended with similar loyalty provisions, and they remain in place today. Currently,
Surescripts has exclusivity contracts with at least 78% of PBM eligibility transaction volume.
These contracts therefore foreclose nearly 80% of the PBM side of the eligibility network from
potential competition. The result is to make multihoming substantially more expensive for
customers, rendering the chicken-and-egg problem insoluble for competitors.
151.

Surescripts, whether directly or indirectly via RelayHealth, also imposed

loyalty requirements on nearly all of its EHR customers. By November 2010, Surescripts had
exclusivity contracts with at least 81% of the EHR routing market and at least 78% of the
EHR eligibility market (both measured by transaction volume), including contracts with
major EHRs such as Allscripts, Epic, and eClinicalWorks. Nearly all of the loyalty contracts
with these entities have been renewed or amended with similar loyalty provisions, and they
remain in place today. Currently, Surescripts-which in 2015 took direct control over nearly
all of RelayHealth’s routing contracts with EHRs-has loyalty contracts with at least 87% of
EHR routing and eligibility transaction volume. These contracts therefore foreclose well

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over 80% of the EHR sides of the routing and eligibility networks from potential
competition. The result is to make multihoming substantially more expensive for customers,
rendering the chicken-and-egg problem insoluble for competitors.
152.

The foreclosure percentages in paragraphs 172-174 likely understate the

foreclosure effects of Surescripts’s conduct, which is based on contracts for Surescripts’s
largest routing and eligibility customers. There is a “long tail” of smaller Surescripts
customers that are also foreclosed by the same loyalty contracts described above, which only
further increases the percentage of each side of each market that Surescripts has been able to
foreclose.
153.

Surescripts’s loyalty contracts disrupt competition in routing and eligibility.

Because Surescripts has foreclosed at least 70-80% of each of the routing and eligibility markets,
even when a competitor offers lower per-transaction prices, no customer will do business with
that competitor because that competitor cannot lower the customer’s total e-prescribing cost.
Because of Surescripts’s conduct, no competitor can gain enough scale to solve the chickenand- egg problem and compete with Surescripts. Customers, including PBMs, EHRs, and
pharmacies, are all harmed by not having any choice of routing or eligibility provider.
154.

A pharmacy would sign up with a Surescripts competitor-and thus incur non-

loyalty penalties via higher prices or clawbacks-only if the competitor can route enough
prescriptions from EHRs that are priced low enough to create sufficient savings to offset the
pharmacy’s losses from the foregone Surescripts discounts. Likewise, an EHR will sign up
with a Surescripts competitor-and thus incur non-loyalty penalties via eliminated incentive
payments or clawbacks-only if the competitor can pay the EHR high enough incentives on a

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sufficient number of transactions to offset the EHR’s losses from the foregone Surescripts
payments. This same logic applies to PBMs and EHRs for eligibility.
155.

Surescripts’s loyalty regime ensures that no customer could ever attain a lower

total cost by multihoming, even if Emdeon or some other competitor offered that customer, in
the words of one of Surescripts’s former vice presidents, “some phenomenally low amount” on
the transactions sent through Emdeon’s network.
156.

Pharmacies and PBMs receive discounts from Surescripts in exchange for

agreeing to exclusivity. A competing platform that sought to convince a pharmacy or PBM to
multihome would need to offer a lower price to compensate that customer for losing its loyalty
discount with Surescripts. Due to the limited connections to EHRs that a competing platform
could offer, the compensating price would have to be negative, meaning the competing platform
would have to pay pharmacies and PBMs for each routing and eligibility transaction.
157.

Similarly, EHRs receive incentive fees from Surescripts in exchange for

agreeing to exclusivity. A competing platform that sought to convince an EHR to multihome
would need to offer higher incentive fees to compensate that customer for losing its incentive
fees from Surescripts. Due to the limited connections to pharmacies and PBMs that a competing
platform could offer, the compensating incentive fees would be unprofitable for an equally
efficient competitor.
158.

By foreclosing approximately 80% of both markets and making the chicken-and-

egg problem insoluble, Surescripts has ensured that no other competitor can be or remain viable
in either routing or eligibility, or both.

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B.

Surescripts forces its routing and eligibility customers into exclusivity.

159.

Many pharmacy, PBM, and EHR customers that have entered into loyalty

contracts with Surescripts would prefer the option of having a competing network for routing and
eligibility. However, because these pharmacies, PBMs, and EHRs compete with other
pharmacies, PBMs, and EHRs, they cannot absorb higher e-prescribing costs and remain
competitive. Thus, Surescripts’s customers lack the realistic ability to refuse Surescripts’s loyalty
requirements or pricing.
160.

As one Surescripts EHR customer explained, despite “strongly object[ing] to the

... exclusivity provisions” in Surescripts’ s contract, it had no choice but to agree to
Surescripts’ s exclusivity provision “[b]ecause there were no alternative providers that could
meet all of its needs.” Though the customer recognized “that the inclusion of the exclusivity
provisions provided Surescripts with the ability to protect its dominance in the e-prescribing
market place,” the EHR customer had “to enter into a contract that included those provisions
if [the EHR] wanted to enter into e-prescribing.”
161.

Another Surescripts customer similarly feared that “Surescripts would have cut

us off’ if that customer did not sign an exclusive agreement with Surescripts.
162.

Surescripts today thus no longer competes on the merits, but instead relies on its

size, its ability to force customers into exclusivity, and the success of its loyalty program to
maintain its monopolies.
C.

Surescripts’s conduct has led to higher net prices for routing and eligibility.

163.

As Surescripts’s then-Vice President of Corporate Strategy testified: “[P]ricing

isn’t dictated by competition at Surescripts.”

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164.

But for Surescripts’s anticompetitive course of conduct, the net price (taking

into account both sides of the network) of the routing transaction would be lower. Similarly,
without Surescripts’s loyalty contracts, the net price (taking into account both sides of the
network) of the eligibility transaction would be lower.
165.

The handful of instances where a single customer uses both the Surescripts

network and the Emdeon network shows that Emdeon is able to provide lower per-transaction
prices or higher per-transaction incentives.
166.

For example, Kroger is one of the last companies that uses both Emdeon and

Surescripts via RelayHealth for routing. Emdeon charges Kroger pharmacies per-transaction
prices that are lower than Surescripts's prices. Similarly, Emdeon has sold the routing
transaction to one PTV customer, Rx30, at a per-transaction price that was lower than
Surescripts's per-transaction price, and has offered to sell to another PTV customer, QS/1, at a
per-transaction price that was lower than Surescripts's.
167.

For eligibility, Emdeon offered prices that were lower than Surescripts's. A

Surescripts PBM sales employee noted on May 20, 2015 that "competitors are under-pricing us
such as Em[]deon with Eligibility. We are hearing that Emdeon is committing to promising half
of our rate . . . . We are starting to hear a significant amount of concern that our price is too high
. . . . Emdeon is making an aggressive [effort] now towards Medlmpact. They are about [to]
launch a pilot together [resulting] in a [lower] transaction rate." Yet there is no evidence that
Surescripts attempted to match Emdeon's price for eligibility. Additionally, Allscripts
charged at least one PBM (a PBM that had a direct connection with Allscripts) a price that was
lower than what that same PBM was currently paying to Surescripts for the same eligibility
transaction.

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168.

On the EHR side, Surescripts understood and acknowledged its ability to

price above the competitive level. In an email exchange concerning EHR eClinicalWorks’s
attempts to negotiate for higher incentive payments, one Surescripts executive explained to
another that “[ eClinicalWorks’s] position in negotiating for more and more $$ only seems
relevant when there are at least 5 more ‘Surescripts’ from which to choose. Today there is
just one Surescripts.”
169.

Emdeon was willing to pay higher incentives to EHRs. For example, in 2010

Emdeon paid Allscripts incentives that were higher than what Surescripts and RelayHealth
paid Allscripts. And Emdeon continued to pay Allscripts incentives that were higher than
Surescripts’s until Allscripts was forced to disconnect from Emdeon in June 2013. Emdeon
has also offered to pay higher incentives to EHRs.
170.

Because the loyalty contracts limited competitors’ expansion, and thereby

reduced pharmacies’, PBMs’, and EHRs’ leverage with Surescripts, the contracts have
enabled Surescripts, free from competitive discipline, to continue to demand higher prices
from customers.
171.

For example, in April 2012, Surescripts increased transaction prices (by

decreasing incentive payments) on all EHRs for both routing and eligibility. In
contemporaneous documents, Surescripts recognized that it was able to use its monopoly
power to take money away from EHRs by decreasing these incentive payments. Indeed, no
EHR was able to avoid these incentive payment reductions. No EHR moved its business to a
Surescripts competitor or refused to do business with Surescripts as a result of this price increase.
172.

As another example, in July 2013, Surescripts analyzed the impact of

Allscripts’s June 20, 2013 termination of its relationship with Emdeon, which Surescripts

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required Allscripts to do in the 2010 Surescripts-Allscripts agreement. In a presentation that
was circulated and commented on by senior Surescripts executives, Surescripts concluded
that, because Allscripts had to stop using the cheaper Emdeon network and now had to route
its volume through the more expensive Surescripts network, those few pharmacy customers
that were not loyal to Surescripts were “feeling economic pain” and “paying ‘more at the
pump.”‘ This same presentation calculated exactly how much “economic pain” its pharmacy
customers such as Kroger were experiencing: Because Kroger no longer got its Allscripts
prescriptions at Emdeon’s lower per-transaction rate, but now had to pay Surescripts’s higher
per transaction rate. Kroger documented that the result of being forced to pay Surescripts’s
higher prices meant that its routing costs “increased significantly,” by approximately 25%.
D.

Surescripts’s conduct has reduced innovation in routing and eligibility.

173.

Surescripts’s dominance over routing and eligibility has allowed it to control the

rate of innovation, or lack thereof. A lack of competitive discipline and customers’ inability to.
change e-prescribing vendors has led to reduced innovation in e-prescribing. As one RelayHealth
senior executive testified: “I can tell that in general that the industry wants e-prescribing to
evolve, and it’s not.”
174.

Surescripts agrees. As Surescripts’s former Chief Strategy Officer testified,

from the time he joined Surescripts until when he left in 2012, that he “saw a bloated
organization that wasn’t lowering cost, not delivering where people would feel like they
were true customers.” A January 2013 Surescripts presentation forwarded to Surescripts’s
Executive Vice President and Chief Customer Officer summarized the issue aptly: “There’s
a ‘we’ve got such a dominant market position in e-prescriptions, who’s going to come in and
threaten us?’ attitude.”

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175.

Surescripts’s agreements with RelayHealth provide examples of how, in

RelayHealth’s words, “[t]he current [RelayHealth] relationship with [Surescripts] ... inhibits
innovation.”
176.

Significantly, this innovation would have occurred in not just the routing

market, but also in the eligibility market. Because of Surescripts’ s conduct, however,
consumers have had to wait many years to receive the benefits of such innovation, if
consumers ever received those benefits at all.
177.

For example, the 2010 Surescripts-RelayHealth contract called for the two

companies to co-develop an initial list of 27 different value-added services, including
Adherence Monitoring, Prescription History to Hospitals, Print @ Patient Cell Phone, Rx
Claim Pre- Adjudication, Real-Time Benefit Check, electronic Prior Authentication, and
REMS-related services such as prohibiting the prescribing/dispensing of medications with
Risk Evaluation and Mitigation Strategies.
178.

Not one joint Surescripts-RelayHealth value-added product or service resulted

from the 2010 contract.
179.

Similarly, not one joint Surescripts-RelayHealth product or service has resulted

from the 2015 contract.
180.

As alleged above, Surescripts repeatedly described the sole value of its

agreements with RelayHealth as keeping RelayHealth’s customers exclusive to Surescripts
and preventing RelayHealth from competing against Surescripts in routing.
181.

On numerous occasions, RelayHealth unsuccessfully attempted to collaborate

with Surescripts to develop these value-added services. One RelayHealth executive testified
that Surescripts proved to be “not very innovative or cooperative when it comes to value-

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added services” and that Surescripts’s “words were much rosier than their actions, and
[RelayHealth] presented many solutions from a value-add perspective, and they seemed to fall
on deaf ears, and they were not pursued.” The failure of Surescripts and RelayHealth to
collaborate ‘‘wasn’t for a lack of trying on [RelayHealth’s] part.” Surescripts never provided
an explanation to RelayHealth as to why Surescripts chose not to collaborate with RelayHealth
on any value-added services listed in the 20IO contract.
182.

For example, the 2010 contract called for Surescripts and RelayHealth to co-

develop a real-time benefit check service that would represent a significant improvement
over Surescripts’s existing eligibility service. Unlike Surescripts’s eligibility offering, which
relied on non-patient-specific, static formulary information, real-time benefit check allows a
PBM to transmit patient-specific, real-time formulary information to physicians. Surescripts
has known how to transmit such real-time formulary information since 2005, and RelayHealth
expected to co-develop this service after the signing of the 2010 contract. Indeed,
RelayHealth brought up this and other value-added services proposals at quarterly business
meetings with Surescripts from 2012 to 2014. Surescripts never engaged with RelayHealth in
developing real-time benefit check. Surescripts never shared any confidential or proprietary
data, information, or technology with RelayHealth concerning real-time benefit check or other
value-added services.
183.

Only once RelayHealth understood that Surescripts had no intention to collaborate

did RelayHealth develop value-added services such as real-time benefit check on its own. As
early as 2013, RelayHealth began efforts to develop a real-time benefit check solution by itself,
which RelayHealth brought to market in 2017. At that point, facing competition from
RelayHealth, Surescripts finally brought its own real-time benefit check service to market.

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184.

The harms from Surescripts’s conduct with respect to RelayHealth continue

through today. The 2015 Surescripts-RelayHealth agreement, which is currently in effect,
contains an implicit non-compete that prevents RelayHealth from competing against Surescripts
in routing.
185.

Had Surescripts not completely excluded all competition from the relevant

markets-whether it was Emdeon, RelayHealth, Allscripts, or otherwise-competitive forces would
have spurred Surescripts to innovate faster, bringing (or trying to bring) services such as realtime benefit check to the market earlier. Consumers were harmed as a result of these significant
innovation delays.
E.

Surescripts’s conduct has reduced quality in routing and eligibility.

186.

Similarly, because Surescripts faces no competition, it also has no incentive to

improve its services, resulting in reduced quality to its customers. Again, Surescripts agrees: In
2015, Surescripts wrote, “[b]ecause we didn’t grow up in a competitive environment and we
grew up as a monopoly, we don’t have the best way of dealing with customers.”
187.

Customers agree. They have echoed these critiques, complaining that

Surescripts has poor customer service, is slow to innovate, impedes EHRs’ ability to
innovate due to stringent certification requirements, and uses opaque pricing strategies.
Surescripts’s own executives report that customers use the following words to describe
Surescripts: “monopoly,” “entrenched,” “slow,” “difficult,” “misleading,” “challenging,”
“inconsistent,” and “dictates.”
188.

To take one example, as early as January 2011 Surescripts knew that many of its

pharmacy customers were dissatisfied with Surescripts’s service surrounding a specific type of
routing transaction called “Denied, NewRx to Follow” or “DNTF,” which small, independent

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pharmacies believed—correctly—caused Surescripts to double-bill the pharmacies for a
single transaction. In October 2012, Surescripts calculated that it was taking in substantial
amounts in DNTF transaction charges despite knowing that this was “a hot issue for
independent pharmacies.” Surescripts, however, did not change its practices on DNTF until
April 2013, 27 months after Surescripts’s senior executives knew that Surescripts was doublebilling its routing customers.
189.

Had Surescripts’s anticompetitive conduct not allowed it to maintain its

monopoly status, consumers would have been able to choose other options that could have
provided better customer service, or at least provided a competitive threat to spur Surescripts
to improve the quality of its own services. But because Surescripts has unlawfully
maintained its monopolies through its exclusive dealing and other anticompetitive
arrangements with RelayHealth and Allscripts, consumers have been denied the quality
improvements that competition brings.
F.

Surescripts’s conduct has reduced quality-adjusted output and overall
transaction output.

190.

Surescripts’s conduct has reduced innovation and thus has also reduced quality-

adjusted output. But for Surescripts’s conduct, there would be more and faster innovation in
the routing and eligibility markets.
191.

In addition to quality-adjusted output, Surescripts’s conduct has also reduced

output as measured by transaction volume. As of 2017, 69% of doctors were utilizing eprescribing. But for Surescripts’s conduct, competition for prescribers (via their EHRs)
would likely result in higher incentive payments to EHRs, which would in turn provide
incentives to EHRs to increase its doctors’ utilization of e-prescribing. At least one EHR
welcomed the idea of higher incentives tied to growth: “[W]e would welcome an additional
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‘target’ level whereby the incentive would increase ... as the volume grows.” And Allscripts
told Surescripts that higher incentives tied to volume instead of loyalty would allow it to
commit “to an increase in electronic prescription transactions from all our products through the
Surescripts network.” Surescripts, however, rejected these options in favor of contractual
language that implemented its loyalty scheme.
192.

Additionally, Surescripts’s stringent certification requirements have delayed

adoption and utilization of e-prescribing. Absent the restraints, increased price, innovation, and
quality competition among networks for EHR volume would likely further incentivize or enable
EHRs to increase the utilization of e-prescribing among doctors.
G.

There is no legitimate procompetitive business justification for Surescripts’s
conduct.

193.

As the Senior Vice President of one of Surescripts’s large hospital system

customers wrote in a March 2, 2011 letter to Surescripts’s CEO expressing his “deep concern”
about Surescripts’s exclusivity requirements: “There is no conceivable justification for this
policy other than Surescripts’ desire to maintain an e-prescribing monopoly.”
194.

Surescripts’s exclusivity requirements do not serve any legitimate procompetitive

business purpose. Increases in adoption and utilization were largely driven by incentives under
MIPPA, the HITECH Act, and a broader movement towards computerized health records
generally. While incentive payments to EHRs may increase output, the exclusivity provisions to
which those incentives are tied do not enhance or otherwise further the adoption or utilization of
e-prescribing.
195.

Surescripts’s exclusivity requirements were not reasonably necessary to reduce

prices. Moreover, Surescripts could have accomplished this objective through less restrictive
alternatives, primarily through discounts based on volume, not loyalty.
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196.

Surescripts is not a natural monopoly. E-prescribing customers treat Surescripts

like any other vendor, seeking out alternatives to Surescripts for routing and eligibility. A small
number of customers use multiple networks. At least one smaller-scale competitor, Emdeon, has
offered lower pricing and higher incentive payments.
197.

There is no legitimate procompetitive justification for the features in Surescripts’s

contracts with Allscripts. Indeed, though it was only after Surescripts became aware of the FTC’s
investigation, Surescripts and Allscripts dropped many of these provisions, yet Surescripts is still
able to provide routing and eligibility services to Allscripts today.
198.

There is no legitimate procompetitive justification for Surescripts’s routing

non- compete with RelayHealth. Other provisions in the 2010 contract provided strong
protections for any of Surescripts’ s proprietary information. Any proprietary information
disclosed by either party to the other in connection with the agreement was protected by the
recipient party from disclosure to others. Any documentation provided by Surescripts under
the 2010 contract was designated proprietary to Surescripts, and RelayHealth could not copy
or use that documentation in any way other than as specifically authorized by the agreement.
199.

Plaintiffs and members of the Class had no knowledge of Defendants’

unlawful self-concealing scheme and could not have discovered the scheme and conspiracy
through the exercise of reasonable diligence more than four years prior to the filing of this
Complaint.
200.

This is the case because the nature of Defendants’ conspiracy was self-

concealing and because Defendants employed deceptive practices and techniques of secrecy to
avoid detection of, and to fraudulently conceal, their contract, combination, conspiracy and
scheme. Notwithstanding the self-concealing nature of their conspiracy, Defendants and their

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co- conspirators wrongfully and affirmatively concealed the existence of their continuing
combination and conspiracy from Plaintiffs by, among other things, concealing from Plaintiffs
and the public the exclusive nature of the loyalty contracts between Surescripts and
RelayHealth, Surescripts and Allscripts, and between Surescripts, RelayHealth, and PTV CoConspirators.
201.

Because the alleged conspiracy was both self-concealing and affirmatively

concealed by Defendants and their co-conspirators, Plaintiffs and members of the Class had
no knowledge of the alleged conspiracy, or of any facts or information that would have caused
a reasonably diligent person to investigate whether a conspiracy existed, until May 3, 2019 at
the earliest, when the Federal Trade Commission filed a complaint in the United States
District Court for the District of Columbia alleging a Surescripts scheme to monopolize
routing and eligibility markets.
202.

As a result of Defendants’ fraudulent concealment, all applicable statutes

of limitations affecting the Plaintiffs and the Class’s claims have been tolled.
VIII. ANTITRUST IMPACT AND IMPACT ON INTERSTATE CONDUCT
203.

During the relevant period, Plaintiffs and members of the Class paid

substantial overcharges on routing transactions directly from Surescripts, RelayHealth, and
PTV Co- Conspirators. As a result of the illegal conduct alleged in this complaint, members
of the Class were compelled to pay, and did pay, artificially inflated prices for their routing
transactions.
204.

Consequently, Plaintiffs and members of the Class have sustained substantial

losses and damage to their business and property in the form of overcharges. The full amount,

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form, and components of such damages will be calculated after discovery and upon proof at
trial.
205.

Defendants’ efforts to monopolize and restrain competition in the market

for routing and eligibility have substantially affected interstate commerce.
206.

At all material times, Defendants sold e-prescription routing and eligibility in

a continuous and uninterrupted flow of commerce across state and national lines and
throughout the United States.
207.

At all material times, Defendants transmitted funds as well as contracts,

invoices and other forms of business communications and transactions in a continuous and
uninterrupted flow of commerce across state and national lines in connection with the sale of
e-prescription routing and eligibility.
VIV. CLASS ACTION ALLEGATIONS
208.

Plaintiffs, on behalf of themselves and all Class members, seek damages,

measured as overcharges, trebled, against Defendants based on allegations of anticompetitive
conduct in the markets for routing and eligibility.
209.

Plaintiffs bring this action on behalf of themselves and, under Federal Rule

of Civil Procedure 23(a), (b)(2), and (b)(3), as representatives of a Class defined as follows:
All pharmacies in the United States and its territories who paid for e-prescription
routing transactions from Surescripts, RelayHealth, or any pharmacy technology
vendor with an exclusive Surescripts or RelayHealth routing contract during the
period September 21, 2010, through and until the date of trial.
Excluded from the Class are Defendants and their officers, directors,
management, employees, subsidiaries, or affiliates, and all governmental entities.

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210.

Members of the Class are so numerous that joinder is impracticable. Plaintiffs

believe that the Class numbers in the tens of thousands. Further, the Class is readily identifiable
from information and records in Defendants’ possession.
211.

Plaintiffs’ claims are typical of the claims of the members of the Class.

Plaintiffs and all members of the Class were damaged by the same wrongful conduct of the
Defendants, i.e., they paid artificially inflated prices for e-prescription routing and were
deprived of earlier and more robust competition from cheaper competitors as a result of
Defendants’ wrongful conduct.
212.

Plaintiffs will fairly and adequately protect and represent the interests of the

Class. The interests of the Plaintiffs are coincident with, and not antagonistic to, those of the
Class.
213.

Plaintiffs are represented by counsel with experience in the prosecution of

class action antitrust litigation, and with particular experience with class action antitrust
litigation involving the healthcare industry.
214.

Questions of law and fact common to the members of the Class predominate

over questions that may affect only individual class members because Defendants have acted
on grounds generally applicable to the entire Class thereby making overcharge damages with
respect to the Class as a whole appropriate. Such generally applicable conduct is inherent in
Defendants’ wrongful conduct.
215.

Questions of law and fact common to the Class include:

A.

Whether Surescripts willfully obtained and maintained market power over eprescription routing;

B.

Whether Surescripts unlawfully excluded competitors and potential
competitors from the markets for routing and eligibility;

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C.

Whether Surescripts has any legally cognizable procompetitive benefit that
could not have been achieved using a means with less restrictions on
competition, and if so, whether the anticompetitive effect of Surescripts’
misconduct nonetheless outweighs the procompetitive benefit;

D.

Whether Surescripts entered into an illegal agreement with RelayHealth not to
compete and to allocate the routing market to Surescripts;

E.

Whether the unlawful scheme alleged herein has substantially affected
interstate commerce;

F.

Whether Defendants’ anticompetitive conduct caused antitrust impact to
Plaintiffs and members of the class; and

G.

The quantum of aggregate overcharge damages to the class.

216.

Class action treatment is a superior method for the fair and efficient

adjudication of the controversy. Such treatment will permit a large number of similarly-situated
persons to prosecute their common claims in a single forum simultaneously, efficiently, and
without the unnecessary duplication of evidence, effort, or expense that numerous individual
actions would engender. The benefits of proceeding through the class mechanism, including
providing injured persons or entities a method for obtaining redress on claims that could not
practicably be pursued individually, substantially outweighs potential difficulties in
management of this class action.
217.

Plaintiffs know of no special difficulty to be encountered in the maintenance

of this action that would preclude its maintenance as a class action.
CLAIMS FOR RELIEF
CLAIM I – MONOPOLIZATION
VIOLATION OF SECTION 2 OF THE SHERMAN ACT (15 U.S.C. § 2)
(ASSERTED AGAINST SURESCRIPTS)
218.

Plaintiffs repeat and incorporate by reference all preceding paragraphs

and allegations.

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219.

As described above, from approximately September 2010 to the present,

Surescripts possessed monopoly power in the markets for e-prescription routing and
eligibility. No other competitor has been able to restrain Surescripts’ ability to charge
supracompetitive monopoly prices for routing transactions during the relevant time period.
Surescripts had and has the ability to control prices and exclude competitors.
220.

Surescripts willfully and unlawfully maintained its market power in the

routing market by engaging in an anticompetitive scheme to prevent legitimate competition on
the merits. Surescripts’ monopolies have been maintained by its anticompetitive conduct and
not as a result of providing a superior product, business acumen, or historical accident.
221.

Surescripts’ course of anticompetitive conduct includes its exclusive or de

facto exclusive agreements with pharmacies, PTV Co-Conspirators, and EHRs, requiring those
entities to use the Surescripts network exclusively or nearly exclusively for routing, as well as
the non-compete provisions in its contracts with RelayHealth. Collectively, Surescripts’
contracts substantially foreclose the routing market from actual and potential competition.
222.

There are no valid procompetitive justifications for Surescripts’ exclusionary

conduct in the routing market and even if there were (and there are not), any such ostensible
procompetitive benefit could have been obtained through a less restrictive means.
223.

By means of this scheme, Plaintiffs and members of the Class paid artificially

inflated prices for routing transactions, for nearly a decade. Plaintiffs and members of the Class
have been injured in their property by Surescripts’ antitrust violations. Their injury consists of
having paid, and continuing to pay, higher prices for routing transactions than they would have
paid absent Surescripts’ scheme. Such injury is of the type antitrust laws were designed to

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prevent and flows from that which makes Surescripts’ conduct unlawful. Plaintiffs are the
proper entities to bring a private case concerning this conduct.
224.

Surescripts’ anticompetitive acts violate Section 2 of the Sherman Act.
CLAIM II – CONSPIRACY TO MONOPOLIZE
VIOLATION OF SECTION 2 OF THE SHERMAN ACT (15 U.S.C. § 2)
(ASSERTED AGAINST SURESCRIPTS AND RELAYHEALTH)

225.

Plaintiffs repeat and incorporate by reference all preceding paragraphs

and allegations.
226.

As described above, from approximately September 2010 to the present,

Surescripts possessed monopoly power in the markets for e-prescription routing and eligibility.
No other competitor has been able to restrain Surescripts’ ability to charge supracompetitive
monopoly prices for routing transactions during the relevant time period. Surescripts had and
has the ability to control prices and exclude competitors.
227.

In addition to agreeing to express and per se unlawful contracts in restraint of

trade with Surescripts, RelayHealth conspired with Surescripts to unlawfully maintain
Surescripts’ monopoly over the routing market. In coordination with Surescripts, RelayHealth
and PTV Co-Conspirators effectively required pharmacy customers to use only the Surescripts
routing network, furthering Surescripts’ goal of maintaining its monopolies with a market-wide
web of anticompetitive loyalty contracts.
228.

In return for requiring their own customers to remain loyal to Surescripts and

eschew competitors’ offers, RelayHealth and PTV Co-Conspirators received a share of the
supracompetitive profits that Surescripts secured through its monopolies. This payment took the
form of increased margin, or “ spread,” between the price Surescripts charged RelayHealth and
PTV Co-Conspirators for routing transactions and the price RelayHealth and PTV CoConspirators could charge pharmacies.
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229.

The goal, purpose, and effect of the Surescripts-directed conspiracy was to

maintain and extend Surescripts’ monopoly over the routing market so as to ensure
continued monopoly profits for Defendants and to effectively fix e-prescription routing
prices.
230.

As a direct and proximate result of the conspiracy to monopolize, Plaintiffs

and the members of the Class paid artificially inflated prices for routing transactions and were
harmed as a result. These injures are of the type the Sherman Act was designed to prevent,
and flow from that which makes Surescripts’ and RelayHealth’s conduct unlawful.
231.

By engaging in the foregoing conduct, Surescripts and RelayHealth

have intentionally and wrongfully conspired to monopolize in violation of the Sherman
Act.
232.

But for the unlawful conspiracy to monopolize between Surescripts,

RelayHealth, and PTV Co-Conspirators, RelayHealth and other potential routing competitors
would have competed in the routing market, leading to lower routing prices for Plaintiffs and
members of the Class.
CLAIM III – CONSPIRACY/COMBINATION IN RESTRAINT OF TRADE
VIOLATION OF SECTION 1 OF THE SHERMAN ACT (15 U.S.C. § 1)
(ASSERTED AGAINST SURESCRIPTS AND RELAYHEALTH)
233.

Plaintiffs repeat and incorporate by reference all preceding paragraphs

and allegations.
234.

As described above, from approximately September 2010 to the present,

Surescripts possessed market power in the markets for e-prescription routing and
eligibility; Surescripts had and has the ability to control prices and exclude competitors.

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235.

In and around February 2010, in response to potential competition, Surescripts

entered into an unlawful agreement with RelayHealth that prohibited RelayHealth from
competing against Surescripts in the routing market. Although couched as a continuation of the
existing “value-added reseller” relationship between Surescripts and RelayHealth, this
agreement was in fact a naked agreement not to compete and to allocate markets among actual
and potential horizontal competitors and is a per se violation of the antitrust laws.
236.

Alternatively, even if found not to be a per se violation of the antitrust laws,

the February 2010 Surescripts/RelayHealth agreement is a violation under the rule of reason
framework; there is no valid procompetitive justification for the agreement to restraint trade
and even if there was (and there is not), any ostensible procompetitive benefit could have been
achieved through lesser restrictive means.
237.

In or around January 2015, Surescripts and RelayHealth renewed the

agreement not to compete, and for Surescripts to remain the sole provider of routing services to
RelayHealth’s routing resale operations. RelayHealth also agreed to abandon its position in the
EHR market and surrendered its EHRs to Surescripts. This agreement expanded upon and
continued the per se unlawful market allocation/agreement not to compete from 2010. An
internal competition analysis from Surescripts at the time characterized RelayHealth as a “
Core Systemic [Competitor].” Celebrating the agreement that neutralized the competitive
threat, Surescripts’ Chief Quality Officer emailed Surescripts’ Vice President of Customer
Accounts and congratulated him by noting that “ I would not want to have Relay out there
competing directly against us.” For its part in the scheme, RelayHealth was allowed a portion
of the supracompetitive routing profits.
238.

As of today, RelayHealth has not entered the routing market.

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239.

The purpose and effect of the agreements between Surescripts and RelayHealth

and PTV Co-Conspirators was to eliminate competition in the routing market, allocate
supracompetitive profits among competitors, and effectively fix e-prescription routing prices,
all at the expense of Plaintiffs and the Class.
240.

As a direct and proximate result of the unlawful restraint of trade between

Surescripts, RelayHealth, and PTV Co-Conspirators, Plaintiffs and the members of the
Class paid artificially inflated prices for routing transactions and were harmed as a result.
These injures are of the type the Sherman Act was designed to prevent, and flow from that
which makes Surescripts’ and RelayHealth’s conduct unlawful.
241.

By engaging in the foregoing conduct, Surescripts and RelayHealth have

intentionally and wrongfully engaged in one or more combinations and conspiracies in
restraint of trade in violation of the Sherman Act.
242.

But for the unlawful agreements between Surescripts and RelayHealth,

RelayHealth and other potential routing competitors would have competed in the routing
market, leading to lower routing prices for Plaintiffs and members of the Class.
CLAIM IV – CONSPIRACY/COMBINATION IN RESTRAINT OF TRADE
VIOLATION OF SECTION 1 OF THE SHERMAN ACT (15 U.S.C. § 1)
(ASSERTED AGAINST SURESCRIPTS AND ALLSCRIPTS)
243.

Plaintiffs repeat and incorporate by reference all preceding paragraphs

and allegations.
244.

As described above, from approximately September 2010 to the present,

Surescripts possessed market power in the markets for e-prescription routing and
eligibility; Surescripts had and has the ability to control prices and exclude competitors.

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245.

On or about May 31, 2010, Surescripts and Allscripts entered into an

unlawful contract in restraint of trade that effectively eliminated Emdeon as a potential
competitor in the routing market and ensured that nascent competitors in the routing market
would not be able to access Allscripts’ sizeable EHR marketshare. The purpose and effect of
the 2010 Surescripts- Allscripts agreement was to maintain Surescripts’ monopolies; in return
for joining the conspiracy, Allscripts received payments from Surescripts— out of its
supracompetitive monopoly profits— in the form of higher-than-market incentive payments.
246.

Surescripts described an early version of this Allscripts agreement with a

picture of a movie containing the slogan “HERE COMES THE BRIBE.”
247.

Surescripts and Allscripts continued their agreement in restraint of trade

through a 2015 contract that extended the exclusivity and revenue sharing provisions for
another five years.
248.

The purpose and effect of the agreements between Surescripts and Allscripts

was to eliminate competition in the routing market, share supracompetitive profits, and
effectively fix e-prescription routing prices, at the expense of Plaintiffs and the Class.
249.

As a direct and proximate result of Surescripts’ and Allscripts’ unlawful

restraint of trade, Plaintiffs and the members of the Class paid artificially inflated prices for
routing transactions and were harmed as a result. These injures are of the type the Sherman
Act was designed to prevent, and flow from that which makes Surescripts’ and Allscripts’
conduct unlawful.
250.

By engaging in the foregoing conduct, Surescripts and Allscripts have

intentionally and wrongfully engaged in one or more combinations and conspiracies in
restraint of trade in violation of the Sherman Act.

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251.

But for the unlawful agreements between Surescripts and Allscripts,

other potential routing competitors would have competed in the routing market, leading
to lower routing prices for Plaintiffs and members of the Class.
DEMAND FOR JUDGMENT
252.

WHEREFORE, Plaintiffs, on behalf of themselves and the proposed

Class, respectfully pray that the Court:
A.

Determine that this action may be maintained as a class action pursuant to
Fed. R. Civ. P. 23(a), (b)(2) and (b)(3); direct that reasonable notice of this
action, as provided by Fed. R. Civ. P. 23(c)(2) be given to the Class; and
declare that Plaintiffs are the representatives of the Class;

B.

Enter joint and several judgments against Defendants and in favor of Plaintiffs
and the Class;

C.

Declare the acts alleged herein to be unlawful under the state statutes set forth
above;

D.

Award Plaintiffs damages as provided by law in the amount to be determined at
trial;

E.

Award the Class damages and, if applicable, treble, multiple, punitive and/or other
damages, in the amount to be determined at trial, including interest; Award
Plaintiffs and the Class the costs of this suit, including reasonable attorneys’ fees
as provided by law; and

F.

Grant such other further relief as is necessary to correct for the anticompetitive
market effects caused by Defendants’ unlawful conduct as the Court deems
appropriate.

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JURY DEMAND
253.

Plaintiffs demand a trial by jury on all issues so triable.

Dated: October 25, 2019

WEXLER WALLACE LLP
By: /s/Kenneth A. Wexler
Kenneth A. Wexler
Justin N. Boley
Tyler J. Story
55 West Monroe St., Ste. 3300
Chicago, IL 60603
T: (312) 346-2222
F: (312) 346-0022
kaw@wexlerwallace.com
jnb@wexlerwallace.com
tjs@wexlerwallace.com
KAPLAN FOX & KILSHEIMER LLP
Robert N. Kaplan, Esq.
Jeffrey P. Campisi, Esq.
Elana Katcher, Esq.
Matthew P. McCahill, Esq.
850 Third Ave., 14th Floor
New York, NY 10022
Telephone: (212) 687-1980
Email: rkaplan@kaplanfox.com
Email: jcampisi@kaplanfox.com
Email: ekatcher@kaplanfox.com
Email: mmccahill@kaplanfox.com
Kaplan Fox & Kilsheimer LLP
Gary Specks
681 Prestwick Lane
Wheeling, Illinois 60090
Tele.: 847.831.1585
Fax.: 847.831.1580
Email: gspecks@kaplanfox.com
Counsel for Plaintiff and the Proposed Class

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