On December 7, 2023, the Federal Trade Commission (FTC) announced that it, the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) are collaborating to promote competition, lower healthcare costs and improve the quality and availability of healthcare. On July 9, 2021, President Joe Biden issued an executive order on promoting competition in the American economy that encouraged federal agencies to work together to enforce the federal antitrust laws, in particular with a focus on scrutinizing healthcare consolidation and pricing of prescription drugs and healthcare services. The interagency announcement reiterates that these three agencies are taking regulatory and legal actions to scrutinize anticompetitive acquisitions and practices in the healthcare space. In particular, the agencies highlighted that they are collaborating on initiatives and sharing information to identify anticompetitive transactions and conduct in the healthcare space.

Takeaways

  • Each agency reiterated that scrutinizing potentially anticompetitive conduct in the healthcare industry is a top priority for each.
  • The agencies are working together to share data to help identify potentially anticompetitive conduct and transactions that otherwise could evade agency review.
  • The FTC is appointing a counsel for healthcare to lead the interagency efforts related to healthcare competition.
  • For the first time, HHS, through the Centers for Medicare & Medicaid Services (CMS), is releasing ownership data on federally qualified health centers and rural health clinics.

Summary of Agency Focus on Conduct in Healthcare Markets

FTC Chair Lina M. Khan stated that "corporate consolidation has contributed to soaring costs across healthcare markets" and that "[s]afeguarding fair competition and rooting out unlawful business practices in healthcare markets is a top priority for the FTC." In addition to the information-sharing efforts and establishment of a healthcare lead mentioned above, the FTC touted several of its healthcare enforcement efforts, including issuing a policy statement warning pharmaceutical companies against improper listings in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations or "Orange Book," its proposed noncompete ban and its federal lawsuit against private equity roll-ups of anesthesiology practices in Texas. A specific interagency initiative includes a joint request for information regarding how private equity firms and other corporations' involvement in healthcare is impacting competition.

"Protecting and promoting competition in healthcare markets is among the [DOJ Antitrust] Division's top priorities," affirmed Assistant Attorney General Jonathan Kanter. The statement highlighted DOJ's recently obtained largest penalty ever imposed for a domestic cartel involving generic drug pricing. The penalty also included $50 million in free pharmaceuticals to patients in need. DOJ also highlighted its challenges to interlocking directorates, consolidation, data sharing and labor market competition issues in the healthcare space. DOJ also touted its memorandum of understanding with HHS' Office of the Inspector General "to increase coordination in information sharing, enforcement activity and training that will strengthen enforcement of federal laws."

Finally, HHS Secretary Xavier Becerra stated that "[c]ompetition in the marketplace lowers costs and spurs innovation" and that the "Biden-Harris administration remains laser-focused on increasing access to high-quality, affordable healthcare for all Americans." For the first time, CMS is releasing ownership data on federally qualified health centers and rural health clinics on data.cms.gov. HHS hopes that making the information transparent will allow evaluation of relationships between common ownership and changes in healthcare costs and outcomes. HHS is also issuing CMS hospital price transparency regulations, developing new payment models for doctors to remain independent and advancing efforts to lower drug prices. Shortly after this release, the White House released a statement announcing new actions to promote competition in healthcare and support lowering prescription drug costs, including the release of a proposed framework for agencies on the exercise of march-in rights on taxpayer-funded drugs and other inventions.

What's Next for Healthcare Companies?

It is abundantly clear that the Biden-Harris administration and various federal agencies have healthcare competition in their crosshairs. The efforts announced by FTC, DOJ and HHS highlight efforts to achieve the mandates of the administration's 2021 executive order. With enforcement of potentially anticompetitive consolidation and conduct in the healthcare space top of mind at the three agencies, healthcare companies should consult with experienced counsel to help them navigate this rapidly changing enforcement landscape.

For More Information

If you have questions about this Alert, please contact Sean P. McConnell, any of the attorneys in our Antitrust and Competition Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.