Nelson Mullins Riley & Scarborough LLP

On July 9, 2021, President Biden issued an “Executive Order on Promoting Competition in the American Economy,” (the “Order”) which aims to drive down prices for consumers, increase wages for workers, and promote innovation and economic growth. Noting that “[r]obust competition is critical to preserving America’s role as the world’s leading economy,” the Order highlights that over the last several decades American industries have consolidated, competition has weakened, and racial, income, and wealth disparities have grown. 

The Order emphasizes that it is the policy of the Biden Administration to enforce the nation’s antitrust laws to combat these issues, challenge transactions that threaten to enhance market concentration, and to support related aggressive legislative reforms. In order to strengthen these efforts, the Order introduces a full scale government effort with seventy-two initiatives to be taken by over a dozen federal agencies.[1] It is important to recognize that the Order does not change the antitrust laws; rather, it signals increased scrutiny and enforcement, especially in healthcare.  

Of note, the Order establishes a “White House Competition Council” within the Executive Office of the President, which shall work to enhance the Federal Government’s efforts with regard to competition. To be led by the Assistant to the President for Economic Policy and the Director of the National Economic Council, the White House Competition Council shall also consist of the heads of various agencies and offices. 

The Order places special emphasis on the healthcare sector, noting the following concerns, among others:

  • The high cost of prescription drugs and healthcare services, which exceed those of other countries;
  • Hospital consolidation which has resulted in inadequate or expensive healthcare options; and 
  • Inhibited competition for generic drugs and biosimilars, particularly resulting from legal red tape such as patent laws. 

The Order also notes concerns with regard to non-compete agreements, directing the Chair of the Federal Trade Commission (“FTC”) to work to exercise the FTC’s rulemaking authority to curtail the use of these “unfair” agreements that may limit worker mobility. While it is unclear what enforcement may look like at this time, non-compete agreements are very common in physician employment agreements and this guidance could have significant implications for hospital systems, physician practices, and other health care providers.   

To address these matters, the Order outlines methods by which the Biden Administration aims to handle such concerns in the healthcare space, which may be grouped into three separate categories:

Prescription Drugs and Hearing Aids

The Order requires the Secretary of the Department of Health and Human Services (“DHHS”) to:

  • Submit a report within forty-five days of the issuance of the Order to the White House Competition Council regarding efforts to combat excessive prescription drug pricing and enhance pharmaceutical supply chains, to reduce the prices paid by the Federal Government for drugs, and to address the recurrent problem of price gauging; 
  • Lower the prices of and improve access to prescription drugs and biologics while working to make the approval process for them more transparent and efficient; 
  • Work with the chair of the Federal Trade Commission (“FTC”) to identify and address efforts to impede generic drug and biosimilar competition; 
  • Address concerns of the Federal Drug Administration with regard to the patent system and the delay of generic drug and biosimilar competition; and 
  • Prepare for Medicare and Medicaid coverage of interchangeable biological products. 

In addition, the Order states that:

  • The Commissioner of the Food and Drug Administration shall work to develop section 804 Importation Programs to reduce the cost of covered products, which facilitate the importation of prescription drugs from Canada; and
  • The FTC shall exercise its rulemaking authority to curtail unfair anticompetitive conduct or agreements in the prescription drug industries, such as agreements to delay the market entry of generic drugs or biosimilars (also known as “pay for delay” agreements). 

The Order also recognizes the high cost of and lack of access to hearing aids, calling for DHHS to issue proposed rules within 120 days thereafter allowing for hearing aids to be sold over the counter. 

Hospitals 

The Fact Sheet accompanying the Order notes that as a result of largely unmonitored hospital consolidations, the ten largest healthcare systems in the United States now control one quarter of the market.[2] To ensure convenient and affordable care for all citizens, the Order calls upon the Justice Department and the FTC to fairly and vigorously enforce the antitrust laws and to review and consider potential revisions to the horizontal and vertical merger guidelines. Following the Order, the Chair of the FTC, Lina Khan, and Antitrust Division Acting Assistant Attorney General, Richard A. Powers, issued a statement emphasizing that the “merger guidelines must reflect current economic realities and empirical learning” and that they must “guide enforcers to review mergers with the skepticism the law demands.”[3] 

The Order also calls upon DHHS to support existing price transparency initiatives for hospitals, other providers, and insurers along with any new initiatives or changes, and to finish implementing legislation to address surprise hospital billing. 

Health Insurance 

According to the Fact Sheet, consumers have little choice for health coverage as a result of consolidation and that even when consumers do have a choice, it is hard to shop by comparison due to differences in plans offered.[4] As a result, the Order directs DHHS to implement standardized options in the National Health Insurance Marketplace. 

The ultimate question becomes, what is the actual impact of this Order? While the outcomes of the Order’s efforts with regard to prescription drugs and health insurance remain to be seen, the effects of antitrust enforcement in the healthcare sector have already begun ramping up. In January 2020, FTC Commissioner Christine Wilson stated that the FTC was “intent on challenging every hospital merger that's going to produce anti-competitive effects.”[5] The FTC has been making good on that promise. Recently, the FTC has pursued an active health care enforcement agenda, including challenging multiple proposed hospital transactions.[6]  

On November 12, 2020, the FTC filed an administrative complaint to block Memphis, Tennessee-based Methodist Le Bonheur Healthcare’s (“Methodist”) $350 million acquisition of two Memphis-area hospitals from Dallas, Texas-based Tenet Healthcare Corporation (“Tenet”):  Saint Francis Hospital-Memphis and Saint Francis Hospital-Bartlett (collectively, “Saint Francis”). According to the FTC’s complaint, “Methodist and Saint Francis are two of only four providers of general acute care inpatient hospital services in the Memphis Metropolitan Statistical Area” and the proposed transaction would “substantially lessen competition in the area.” The FTC alleged that the proposed transaction would “immediately eliminate” direct competition between Methodist and Saint Francis, increase Methodist’s bargaining leverage with commercial insurers, and enhance Methodist’s ability to negotiate more favorable reimbursement terms. 

While Methodist and Saint Francis initially asserted in their November 27, 2020 response to the complaint that competition would actually be “increased rather than diminished” as a result of the proposed transaction, and noted that the “degree of competition between Saint Francis and Methodist is significantly lower than their respective market shares suggest, as is clearly illustrated by historical natural experiments and other evidence,” they ultimately made the decision to call off the transaction, citing the FTC’s efforts to block the acquisition.[7]  

Additionally, on December 3, 2020, the FTC filed an administrative complaint to block New Jersey-based Hackensack Meridian Health, Inc. (“Hackensack”) from acquiring Englewood Healthcare Foundation (“Englewood”), an independent, non-profit hospital and health system located in Bergen County, New Jersey. In the complaint, the FTC stated that the proposed transaction would enhance Hackensack’s dominant position in Bergen County “by giving it control of three of the six inpatient general acute care hospitals in Bergen County.” The proposed transaction would eliminate “head-to-head” competition between Hackensack and Englewood, “leading to higher healthcare prices and diminished incentives to compete on quality and access.” Conversely, Englewood asserted that the transaction would “result in substantial procompetitive benefits, including, but not limited to, merger-specific pricing efficiencies, cost synergies, and other procompetitive effects.”[8] With an administrative trial slated to begin August 16, 2021, many anxiously await the outcome. 

Though the FTC’s winning streak for hospital merger challenges recently ended following a vote to voluntarily dismiss a challenge[9] of a proposed merger of two health systems in Philadelphia's northern suburbs, Thomas Jefferson University and the Albert Einstein Healthcare Network, the FTC is losing no ground in its continued close scrutiny of proposed hospital mergers. In January of this year, the FTC also announced a retrospective study to analyze the effects of physician group and healthcare facility consolidation that occurred from 2015 through 2020.[10] Monitoring competition in the healthcare sector is a hot button issue, and this recently issued Order will add more fuel to that fire.  


[1] 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). 
[2] See FACT SHEET. 
[3] Ms. Khan was sworn in as a Commissioner and Chair of the FTC on June 15, 2021. A permanent Assistant Attorney General for the Antitrust Division has not yet been appointed.  
[4] See FACT SHEET. 
[5] https://www.advisory.com/daily-briefing/2020/01/22/ftc.
[6] See also https://www.nelsonmullins.com/idea_exchange/blogs/healthcare_essentials/all/the-ftc-and-doj-adjust-certain-antitrust-oversight-processes-in-response-to-covid-19 (addressing other ways in which the FTC has been adapting to the COVID-19 pandemic.) 
[7] Methodist Le Bonheur Healthcare & Saint Francis Hospitals merger is off, https://www.localmemphis.com/article/money/business/methodist-le-bonheur-healthcare-saint-francis-hospitals-merger-off/522-401504d7-3d24-4a01-99cd-a6f7c7d2637c, (December 23, 2020).
[8] Answer and Defenses of Respondent Englewood Healthcare Foundation, https://www.ftc.gov/system/files/documents/cases/d09399_r_englewood_answer_and_defenses_public600232.pdf, (December 17, 2020). 
[9] https://www.ftc.gov/enforcement/cases-proceedings/181-0128/thomas-jefferson-university-matter
[10] FTC to Study the Impact of Physician Group and Healthcare Facility Mergers, https://www.ftc.gov/news-events/press-releases/2021/01/ftc-study-impact-physician-group-healthcare-facility-mergers (January 14, 2021). 

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