Biden Executive Order Addresses Healthcare Industry Competition, Targets Pharmaceuticals, Pricing, and Hospital Mergers

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In an ambitious, far-reaching Executive Order[1] signed on July 9, 2021, President Biden announced a renewed focus by the federal government on the promotion of fair competition amongst American businesses. Specifically, Biden’s order directs several federal agencies -- including the Federal Trade Commission (FTC)[2] in conjunction with the Attorney General -- to devise proposals to minimize anti-competitive conditions affecting the U.S. economy.[3] While the Order contains 72 initiatives spanning over a dozen federal agencies, of specific interest to Healthcare Industry businesses and concerns are the following directives addressing competition to achieve the stated goal of “Improving Health Care” in four key areas:

  1. Prescription Medications
  2. Hospitals
  3. Health Insurance
  4. Hearing Aids

The Order highlights the Biden Administration’s view that in each of the four areas, “the lack of competition increases prices and reduces access to quality care.” Of particular note to Healthcare industry participants are the Order’s initiatives at lowering drug prices, improving access to generics and increasing government oversight on Hospital consolidation and mergers.

Lowering Pharmaceutical Drug Prices/Improving Access to Generics: Biden’s order calls on federal health officials to work with their state and local counterparts to come up with plans to import cheaper medicines from Canada. Biden also directed the Department of Health and Human Services (HHS) to issue a comprehensive plan within 45 days to counter high drug prices. To that effect, a key provision directs the FTC to stop so-called “Pay to Delay” agreements in which pharmaceutical manufacturers pay their generic counterparts to delay entry into the market of lower-priced versions of medications, a concept that has already made its way into pending legislation in the Senate and remains consistent with Biden’s promises on the campaign trail in 2020.

While pharmaceutical manufacturers and other drug makers immediately voiced concerns that such broad regulation on pricing would stifle innovation, manufacturers and leading trade groups for generic drugs including the Association for Accessible Medicine announced their approval, stating that they are “looking forward to working with the Biden administration” to increase adoption of lower-cost generics and biosimilars and remedy the growing number of government and payer policies that are said to reward the use of high-cost brands over generic or biosimilar competitors. 

Hospital Consolidation and Mergers: The Order notes that Hospital consolidation has increased healthcare costs and reduced service for some communities, especially rural areas. The executive order directs the Justice Department and FTC to tighten their merger guidelines for hospital acquisition and consolidation deals. It also directs HHS to support hospital price transparency rules and finish implementing legislation to address surprise hospital billing. Friday's executive order calls on the FTC and the U.S. Department of Justice to "enforce the antitrust laws vigorously and recognizes that the law allows them to challenge prior bad mergers that past administrations did not previously challenge," according to the White House statement (emphasis added). The order also announces a policy that enforcement should focus on particular areas of the economy, including healthcare, labor markets, agriculture and tech.

While the Order is broad in scope, it is short on detail and depth. Healthcare interests, still reeling from a once-in-a-century global pandemic, could face tighter antitrust scrutiny, especially in the areas of hospital acquisitions and mergers.[4] Leading industry groups pushed back on the Order and asserted that it could block patients from needed care, arguing that bureaucratic red-tape and complicated legal oversight will slow critical care to patients in need.

Non-Compete Agreements: Of interest to all industries, including healthcare, is the ambitious Order’s directive to review the current use of non-compete agreements in the workplace. Section 5(g) of the Order announces a federal objective of curbing non-compete clauses:

“To address agreements that may unduly limit workers’ ability to change jobs, the Chair of the FTC is encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”


[1] Executive Order on Promoting Competition in the American Economy, The White House, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/ (July 9, 2021). The Order establishes a White House Competition Council, led by the director of the National Economic Council, to coordinate the federal government's response to "the rising power of large corporations" and the implementation of the executive order.

[2] The Senate recently confirmed Lina Khan as a member of the Federal Trade Commission, with President Biden immediately elevating her to serve as the commission's chair. Khan is known for advocating aggressive enforcement of antitrust law and Washington insiders anticipate that she could become one of the most progressive agency leaders in decades.

[3] FACT SHEET: Executive Order on Promoting Competition in the American Economy, The White House, https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/ (July 9, 2021).

[4] Reference is made to an Executive Order signed by President Biden in the first week of his Administration, directing the Department of Labor and OSHA division to devise workplace safety guidance. While the original directive was to address all workplaces, OSHA’s final guidance was solely directed toward Healthcare employers. For more information on Healthcare OSHA COVID-19 Mandates, see Nelson Mullins - OSHA Healthcare Employer Safety Rule Takes Effect, Compliance Deadlines Begin.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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