By Matthew Perlman

Law360 (April 6, 2020, 6:10 PM EDT) -- The U.S. Department of Justice has said that it will not challenge a plan for several medical supply companies, including McKesson Corp., Cardinal Health Inc. and Henry Schein Inc., to work together to speed up the distribution of supplies needed to combat the COVID-19 pandemic.

The Justice Department issued a business review letter on Saturday addressing a plan for the companies to collaborate in order to expedite and increase manufacturing, sourcing and distribution of personal protective equipment and medication. The efforts come as part of the emergency response to the novel coronavirus from the Federal Emergency Management Agency and the U.S. Department of Health and Human Services, which have asked the companies for help.

Assistant Attorney General Makan Delrahim, head of the antitrust division, lauded the suppliers in a statement on Saturday, along with the DOJ staff that reviewed the program for its antitrust implications.

"These medical supplies distributors should be applauded for their efforts to both assist the United States in responding to the COVID-19 pandemic and stay within the bounds of antitrust law," Delrahim said. "I also applaud the attorneys and economists of the antitrust division, who worked expeditiously to finish in days a review process that ordinarily takes many months."

The companies' request for guidance was made through an expedited, temporary procedure launched by the DOJ and the Federal Trade Commission last month for companies that need the agencies to review collaborations and other business arrangements being made in response to COVID-19 and its aftermath.

McKesson, Cardinal Health and Henry Schein, along with Owens & Minor Inc. and Medline Industries Inc., asked the DOJ for a business review letter on March 30, saying their collective efforts would focus on helping the federal government get supplies and medicine to the parts of the country that need it most.

"We ask for your urgent help to ensure we can engage in cooperative efforts that are essential to delivering these critically-needed supplies as quickly as possible to save American lives," the companies wrote in requesting the review.

The DOJ noted in its review letter that the joint guidance from last month recognized that the "exigent circumstances" surrounding the COVID-19 pandemic "will require unprecedented cooperation between federal, state, and local governments and among private businesses to protect Americans' health and safety." The agency also pointed to executive orders issued by President Donald Trump, and the White House's invoking of the Defense Production Act, which it said gave FEMA and HHS authority to control the medical supply chain as the country responds.

FEMA and HHS are directing the collaboration among the medical suppliers, and the DOJ said they or other government entities will be present when most of the coordination occurs. The DOJ also said that FEMA and HHS are already working with the suppliers, along with other companies, on a collaborative effort called Project Airbridge.

That project is aimed at quickly sourcing and airlifting medication and personal protective equipment including masks, gowns and gloves, to the areas of greatest need. The DOJ said antitrust division attorneys communicate regularly with the agencies running Project Airbridge "and in many cases directly observe the associated collaborative activity."

If the companies communicate without government oversight, the DOJ's letter said they have put safeguards in place to ensure they don't run afoul of the antitrust laws. These include agreeing to limit any collaboration to furthering the government's response efforts and agreeing to sequester any competitively sensitive information produced during the collaboration.

The companies also agreed not to use the program to "increase prices, reduce output, reduce quality, or otherwise engage in COVID-19 profiteering," DOJ said.

"Based on these representations and given the current circumstances, it appears as if the procompetitive aspects of any arrangement far outweigh any potential harm," the letter said.

A representative for McKesson told Law360 in a statement on Monday that the company is working closely with government agencies and industry partners to get supplies where they need to be and said it's grateful the DOJ antitrust division is moving quickly to address COVID-19 related scarcity.

"McKesson's highest priorities are responding to the needs of healthcare workers who are on the front lines of this pandemic and delivering critically needed supplies as quickly as possible to save American lives," the statement said. "The work of the antitrust division is helping to make that happen."

The pandemic has left antitrust and consumer protection agencies scrambling worldwide to continue their functions amid the economic and social disruption. In addition to their normal workloads, they've also been cracking down on novel coronavirus-related conduct like price-gouging of needed goods and creating pathways for certain kinds of conduct aimed at combating the disease and its economic impacts.

Last month, European Union enforcers said that companies in the bloc will be able to coordinate the distribution of much-needed products without being brought up on cartel charges. The U.K.'s Competition and Markets Authority has also issued guidance encouraging companies to coordinate, as long as the coordination ends with the outbreak and is undertaken solely to address concerns from the crisis.

Australia's competition enforcer has also approved several plans for companies to coordinate, including in the oil, energy, pharmaceutical and retail sectors.

A representative for Cardinal Health declined to comment about the DOJ's business review letter on Monday. Representatives for the other medical supply companies did not immediately respond to requests for comment.

--Additional reporting by Bryan Koenig. Editing by Nicole Bleier.

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