Bundling’s other test: When AKS-friendly discounts create antitrust risk

For medical device and pharmaceutical manufacturers, the question for bundled discounts may no longer end with, “Can we do this under the DSH or otherwise at low risk under the AKS?” It will also extend to, “What does this do to competition—and how will regulators, competitors, and customers characterize the practical effect?” Advisory Opinion 25-11 recognizes broader pathways for manufacturers to structure safe harbored or low-risk discounts that bundle various products and services or are contingent on achieving market share, but as we noted, those same leverage economics may be considered exclusionary conduct under an antitrust analysis. That tension is especially sharp in today's contracting environment, where manufacturers are increasingly expected to offer integrated solutions across product lines and sites of care.

Recent antitrust litigation involving device manufacturers underscores the risks associated with bundled discount arrangements. Courts and juries have scrutinized discount variations similar to those addressed in the advisory opinion—including upfront bundled discounts and bundled rebates tied to purchase requirements—finding that such arrangements can constitute exclusionary bundling, exclusive dealing, or predatory pricing in violation of Section 2 of the Sherman Act.

Predatory pricing and product bundling under U.S. antitrust law

Under Section 2 of the Sherman Act, a pricing strategy may be found to be predatory if the discount provided to a customer is so deep that competitors are practically deterred from competing in the relevant market due to significant projected losses. This is true even though discounted pricing benefits consumers. Providing discounted prices to a customer who purchases more than one product from a supplier—that is, bundling—is not illegal standing alone, but it may run afoul of the antitrust laws if competitors are harmed in the market for the bundled product. If a monopolist bundles products, there is greater risk that the conduct will be found to violate the antitrust laws. Accordingly, the market share of the seller—and how the contract has impacted, or would impact, the seller's market share—is a key consideration in determining whether discounting practices are illegal under the antitrust laws. 

Low AKS risk does not mean low antitrust risk for bundles

OIG's advisory opinion gives manufacturers substantial flexibility to offer broad, market share-based discounts and bundles under the DSH and AKS, but that same flexibility may generate more antitrust risk. Bundled discount cases under Section 2 involve a fact-specific analysis to determine whether the pricing scheme has exclusionary effects and harms competitors in the market for the bundled product. Courts evaluate whether the level of discount being offered for a bundled product is so significant as to exclude other competitors from entering the market. For example, if a seller offers a discount on a bundle consisting of product A and product B, a competitor who only sells product A may not be able to compete with the bundled price being offered to customers. In this way, a seller offering discounts on bundled products that competitors cannot offer may have an exclusionary effect under Section 2. Antitrust law also considers the effect of the bundling on customers. For example, if a bundle including product A and product B comes with a significant price discount, customers who do not need or want both products may have no choice but to take them both.

Under antitrust law, a bundled discount premised on market share may not survive scrutiny under Section 2 if the underlying agreement will provide the seller with exclusivity or near-exclusivity in the relevant market. An antitrust enforcer will conduct a fact-specific economic analysis weighing different considerations to determine whether the agreement will unduly stifle competition. In addition, the market position of the seller is an integral factor in a Section 2 bundling case. The higher the current market share, the higher the antitrust risk, even though market-leading position itself is not per se illegal.

FTC closely scrutinizes rebates versus discounts

In addition, the Federal Trade Commission (FTC) will likely hold rebates to higher antitrust standards than those for upfront discounts. A recent settlement between FTC and a pharmacy benefit manager (PBM) reflects FTC's position that transparent, upfront discounts pose lower price inflation risks than rebates. FTC often views rebates as a potential means to provide hidden incentives to dealers, increasing the risks of inflating list prices for end customers. This is consistent with the way the antitrust enforcers assess the antitrust risk: thorough analysis of the potential anticompetitive effect of the practice at issue on the market dynamics and consumers, in addition to how the practice is structured and executed, regardless of whether any agreement exists in writing. FTC's intensified pressure related to manufacturer rebates has been particularly prominent in the pharmaceutical industry.[1] Nonetheless, companies in other sectors of the health care industry should also closely monitor the development of FTC's enforcement action involving rebates given the interrelationship between companies involved in drug sales and distribution chains.    

Don't forget the flip side of the bundling coin

After OIG's recent advisory opinion, manufacturers may increasingly face the harder question of whether a low-risk or AKS‑safe harbored bundle creates antitrust exposure by amplifying exclusionary effects or leveraging market power in ways that disadvantage competitors or constrain customer choice. Manufacturers considering bundled offerings should therefore evaluate AKS and antitrust risk as distinct, and sometimes opposing, inquiries, with early, integrated review focused not just on structure, but on real‑world competitive effects.

Authored by Ken Field, Soyoun Yasuda, Eliza Andonova, Laura Hunter, and Mike Dohmann

[1] FTC's position is mirrored in the recently enacted Consolidated Appropriation Act of 2026, which mandates a 100% rebate pass-through specifically applicable to PBMs.