Pass Go and Collect Regulatory Scrutiny: The Biden Administration Takes Aim at Consolidation & Anti-
Given the current political dynamic within Congress, the chances of the Biden Administration enacting significant, substantive health care legislation appear slim in the short-term. Thus, the Biden Administration has sought alternative routes to advance its policy priorities, mainly through budget reconciliation (see here for a comprehensive explainer from the Congressional Research Service) and agency regulation. For example, we have previously written here and here about the “No Surprises Act”, enacted through the legislative short-cut of budget reconciliation as part of the 2021 Consolidated Appropriations Act, and the Biden Administration’s new regulations implementing consumer protections against surprise medical bills. In this mold, President Biden’s July 9 Executive Order on Promoting Competition in the American Economy (the “Order”) appears to lay out an aspirational, yet somewhat more practical agenda to implementing reforms in the health care sector, as compared to relying on new legislation coming through Congress.
The Order tasks federal agencies across the “whole-of-government” to “protect competition in the American economy” by acting on 72 regulatory initiatives, to be coordinated by a newly established “White House Competition Council” with representatives from key federal agencies. While the “whole-of-government” is involved and the entirety of the U.S. economy is targeted, there is a distinct focus among these initiatives on “improving health care” by addressing “overconcentration, monopolization, and unfair competition” in the sector. The Order specifically cites four areas in the health care sector ripe for renewed enforcement and regulatory attention with the goal of lowering prices, promoting competition, and benefiting consumers.
Hospitals. Perhaps most notably to health care provider stakeholders, the Order takes specific aim at hospital consolidation and monopolization, asserting that hospital mergers have harmful market effects and can increase prices without improving quality. Leading industry stakeholders understandably pushed back on the Order, contending that implementation of its priorities could further reduce access to care and ignores the value provided by such stakeholders.
The Order sets forth a number of priority steps for the Federal Trade Commission (“FTC”), the Department of Justice (“DOJ”) and the Department of Health and Human Services (“HHS”) to take to improve hospital competition and consumers’ access to care.
The Order directs the FTC and DOJ to revisit and revise their hospital merger guidelines and “vigorously” enforce the antitrust laws to challenge future mergers, as well as “prior bad mergers that past administrations did not previously challenge.” Notably, just a week earlier, the FTC voted to (i) prioritize investigations into hospitals, pharmaceutical companies, and pharmacy benefit managers, and (ii) streamline its rulemaking procedures while broadening its interpretation of authority to challenge “unfair methods of competition.” Following the order, The FTC and the DOJ issued a joint 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.” More action on merger guidelines (both horizontal and vertical) is sure to come in the following months.