Biden Administration Aims to Strengthen Competition Through Issuance of Sweeping Executive Order
President Biden issued Executive Order 14036 on July 9, 2021, calling for a “whole-of-government approach” to promote competition across many industries, including healthcare. The order establishes a White House Competition Council tasked with working “across agencies to provide a coordinated response to overconcentration, monopolization, and unfair competition in or directly affecting the American economy… .”
In most respects, the order signifies a reaffirmation of antitrust initiatives of this (and prior) administrations, rather than a profound shift of enforcement priorities. The order does not change any current law. However, the order foreshadows an aggressive enforcement climate in which mergers and various forms of competitive conduct – particularly in the healthcare sector – are certain to be closely scrutinized. Now more than ever, it is critical that healthcare providers keep antitrust considerations at the forefront of their business strategies – whether contemplating a merger or joint venture with a competitor, considering an employee non-compete provision, or the like.
The following is a brief summary of the order as it relates to the healthcare sector.
The order focuses on four areas within the healthcare industry where “lack of competition . . . increases prices and reduces access to quality care.”
According to the Fact Sheet, hospital mergers have “left many areas, especially rural communities, without good options for convenient and affordable healthcare service” and have resulted in “the ten largest healthcare systems control[ling] a quarter of the market.” To combat this issue, the order encourages the attorney general and the chair of the Federal Trade Commission (FTC) to review, and consider revising, their merger guidelines. Both agencies have committed to giving the guidelines “a hard look to determine whether they are overly permissive…with the goal of updating them to reflect a rigorous analytical approach consistent with applicable law.” The order encourages the agencies to “challenge prior bad mergers that past Administrations did not previously challenge.”
Not surprisingly, Rick Pollack, the president of the American Hospital Association, pushed back on the notion that lax merger enforcement has created widespread consumer harm: “[I]t is important to stress that hospital mergers and acquisitions undergo an enormous amount of rigorous scrutiny from the federal antitrust agencies and state attorneys general.” Similarly, Chip Kahn, the president of the Federation of American Hospitals, expressed concern about “[m]iring hospitals in legal and bureaucratic red tape.”
Apart from the merger context, the order directs the secretary of Health and Human Services to support “existing price transparency initiatives” and “any new price transparency initiatives or changes made necessary by the No Surprise Act.”
2. Health Insurance
The order addresses consolidation in the health insurance industry that has left consumers with “little choice when it comes to selecting insurers.” To increase competition in the health insurance industry, the order directs the Secretary of Health and Human Services to “implement standardized options” offered on the Health Insurance Marketplace and “any other appropriate mechanisms to improve competition and consumer choice.”
3. Prescription Drugs & Hearing Aids
The order crystallizes the administration’s objective of lowering prescription drug prices. The order includes directives to increase competition through importation and increased availability to generic and biosimilar drugs, create a comprehensive plan to combat high prices and price gouging, ban “pay for delay” and similar agreements, and ensure the patent system does not “unjustifiably delay generic drug and biosimilar competition… .”
The order instructs the commissioner of the Food and Drug Administration to work with states and Indian tribes to develop an importation program in accordance with the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. This program would increase competition by permitting the safe import of prescription drugs from Canada. Additionally, the secretary of Health and Human Services is directed to continue promoting generic drug and biosimilar competition.
The order also provides directives relating to hearing aids. Specifically, it directs the secretary of Health and Human services to, within 120 days of the order, “publish for notice and comment a proposed rule on over-the-counter hearing-aids.” This would allow hearing aids, which consumers usually get from a doctor or specialist, to be sold at lower, over-the-counter prices.
In addition to the healthcare-specific initiatives, the order includes initiatives aimed at increasing competition in the labor markets, which could impact healthcare providers. Specifically, the order focuses on practices that increase “the power of corporate employers, making it harder for workers to bargain for higher wages and better work conditions.” One of these practices is the use of non-competes that “unfairly limit worker mobility.” The order encourages the chair of the FTC to use the agency’s statutory rulemaking authority to address the “unfair use of non-compete clauses” and “unfair occupational licensing restrictions.” Additionally, the chair is encouraged to work with the attorney general to revise the Antitrust Guidance for Human Resource Professionals of October 2016 to better protect workers from wage collusion.