Administration eyeing negative impacts of corporate healthcare ownership
The White House has specifically called out the acceleration of consolidation in healthcare markets, saying it too often leads to higher costs.
Photo: Matt Mawson/Getty Images
The White House has signaled its intent to address the potentially negative and problematic aspects of corporate ownership in healthcare, with a focus on drug pricing, transparency and anticompetitive behavior.
In a fact sheet released by the Biden Administration, the White House specifically called out the acceleration of consolidation in healthcare markets, saying it too often leads to higher costs, worse quality and reduced care access, especially in rural areas.
Citing a review of hospital merger studies, the administration said mergers in concentrated markets led to price increases often exceeding 20%. Consolidation has also led to a rapid decline in independent physician practices, with the research finding that patients of hospital-owned practices pay nearly $300 more for similar care than at independent physician practices.
At the same time, private-equity ownership in the healthcare industry has ballooned, with approximately $750 billion in deals between 2010 and 2020.
In response, the White House said it would launch a cross-government public inquiry into corporate greed in healthcare. The Department of Justice, the Federal Trade Commission and Department of Health and Human Services will issue a joint Request for Information to seek input about how private equity and other corporations' increasing influence in healthcare is affecting Americans.
The agencies will use this joint Request for Information to identify areas for future regulation and enforcement prioritization, and they will continue to work together on case referrals, reciprocal training programs, data-sharing and the further development of additional healthcare competition policy initiatives.
HHS will appoint a Chief Competition Officer and DOJ's Antitrust Division, and FTC will name Counsels for Health Care to lead these efforts.
The administration also signaled its intentions to make ownership information more transparent and to increase Medicare Advantage data transparency.
WHAT'S THE IMPACT?
In efforts to address the rising cost of prescription drugs, the White House highlighted ongoing efforts and said it would strengthen them, including the move to make 10 prescription drugs subject to direct price negotiations between Medicare and participating manufacturers. The administration also said those on Medicare can now receive certain vaccines for free under the president's lower-cost prescription drug law, and touted the Inflation Reduction Act for capping the cost of insulin to $35 per product per month.
The executive branch is also targeting Big Pharma. In September, the FTC issued an enforcement policy statement explaining that Big Pharma companies may face legal action if they delay entry of generic competitors with improper patent listings in the FDA's publication "Approved Drug Products with Therapeutic Equivalence Evaluations," commonly known as the "Orange Book."
"When a brand pharmaceutical company improperly lists a patent in the Orange Book, it may lead to a 30-month statutory stay that blocks the approval of competing drug products, including lower-cost generic alternatives," the White House wrote. "Such improper listings may delay competition and raise prices for life-saving products like asthma inhalers."
FTC and FDA are working to address such improper listings, with FTC announcing last month that it is using FDA's regulatory Orange Book patent-listing dispute process to challenge more than 100 patents listed for brand-name asthma inhalers, epinephrine autoinjectors and other drug products.
THE LARGER TREND
The federal government has consistently targeted consolidation, with the House Oversight committee eyeing pharmacy benefit managers in March, saying they're "harming patient care and increasing costs for consumers."
The committee called on senior officials at the Office of Personnel Management (OPM), Centers for Medicare and Medicaid Services, and the Defense Health Agency (DHA) for documents and communications to determine the extent to which PBMs' practices impact healthcare programs administered by the federal government.
PBMs are cited as one of the factors behind the rise in drug costs, driving up drug prices through fees, according to PhRMA-backed Nephron Research findings published in September. PBMs demand double the amount of fees today than they did five years ago, according to the report.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
