Biden orders agencies to look at hospital consolidation, costs of drugs and hearing aids

Order supports Trump mandate on price transparency

President Joe Biden's executive order on competition featured several health policy directives. (Caroline Brehman/CQ Roll Call)
President Joe Biden's executive order on competition featured several health policy directives. (Caroline Brehman/CQ Roll Call)
Posted July 9, 2021 at 1:25pm, Updated at 2:53pm

The wide-ranging executive order President Joe Biden signed Friday includes plans to boost market competition in health care and other industries.

The order, which White House officials have promoted throughout the week, touches on issues ranging from prescription drug prices to hospital and insurance consolidation, in a combination of policy directives that also incorporates priorities shared with the Trump administration.

“What we’ve seen over the past few decades is less competition and more concentration that holds our economy back. We see it in big agriculture and big tech and big pharma and the list goes on,” Biden said before signing the executive order at the White House Friday.

“Take prescription drugs: just a handful of companies control the market for many vital medicines, giving them leverage over everyone else to charge whatever they want,” the president said.

Many of the provisions of the order provide direction or encouragement to federal departments and agencies on next steps, and there could be lengthy rule-makings to follow on health, transportation and other policy areas.

For instance, the Federal Trade Commission would be encouraged to ban or limit non-compete agreements and revise unnecessary occupational licenses required of many positions in the health care field.

“American’s healthcare and pharmacy workers have been on the frontlines helping millions to get the care and medicine they need throughout the pandemic,” United Food and Commercial Workers International President Marc Perrone said in a statement. “Today’s executive action lowers barriers to entry for healthcare and pharmacy jobs, helping more Americans pursue these good careers and closing the healthcare access gaps that have plagued so many communities across the country.”

Biden’s order directs the Food and Drug Administration to work with states and tribal governments on their plans to import prescription drugs from Canada. The agency first outlined two narrow pathways to importation under former President Donald Trump, but has not yet approved a plan from the only state — Florida — to formally request permission.

Drug importation still faces major headwinds. Industry trade group the Pharmaceutical Research and Manufacturers of America is suing to block the policy, and Canada has also signaled its opposition to large-scale exports.

Biden’s order also directs the Department of Health and Human Services to bolster support for generic and biosimilar drugs and develop a comprehensive plan to combat “price gouging” in the prescription drug market.

The order instructs the Federal Trade Commission to examine anticompetitive practices like “pay for delay,” in which brand name manufacturers strike deals with generic competitors to delay the entry of new products. The idea has broad bipartisan support in Congress, but has been bogged down in more partisan disputes such as whether to allow Medicare to negotiate drug prices.

The FTC will also review guidelines related to hospital mergers in light of the recent string of closures in rural areas. Biden’s order comes after Congress approved a change to Medicare’s requirements for rural hospitals, which will allow facilities to shed unprofitable inpatient services while maintaining emergency and outpatient care. Right now, rural hospitals often seek to merge with larger health systems in order to make the conversion without losing the lifeline of Medicare funding.

The leader of the trade association representing for-profit hospitals was quick to criticize the order.

“The best of intentions can be misguided. Ensuring access to needed medical attention for rural Americans is not going to be assured by excessive anti-trust enforcement action of the FTC or Justice Department. Miring hospitals in legal and bureaucratic red tape will simply slow critical care to the bedside,” Federation of American Hospitals president and CEO Chip Kahn said in a statement.

Health industry mergers

Biden’s broader instructions to the FTC could also prompt the agency to target vertical mergers, which shook up the health care industry in recent years but received little scrutiny from regulators and lawmakers. Retail pharmacy giant CVS Health acquired health insurer Aetna in 2018, the same year that health insurer Cigna acquired Express Scripts, the nation’s largest pharmacy benefit manager.

The executive order underscores that the FTC retains authority to challenge previous deals that were allowed under previous administrations. Health insurance markets are also mentioned in the order, and HHS will be directed to standardize plan options on HealthCare.gov.

The order also highlights support for the Trump administration’s rules on hospital price transparency and a recent law on surprise medical bills, which HHS began implementing earlier this month.

The president’s order also directs HHS to issue rules within 120 days related to a 2017 law allowing hearing aids to be sold over the counter.

Biden on Friday specifically highlighted the push to promote competition in the hearing aid industry by increasing their availability.

“Right now, if you need a hearing aid, you can’t just walk into a pharmacy and pick one up, over-the-counter. You have to get it from a doctor or a specialist,” Biden said. “Not only does that make getting hearing aids inconvenient, it makes them considerably more expensive.”

The issue has split the provider and manufacturer industry concerned about a potential influx of cheap, ineffective devices, and consumer advocates who want lower prices and easier access.

Hearing aids are often not covered by insurance and can cost thousands of dollars. Just four manufacturers control 84 percent of the market, according to the administration, and just 14 percent of people who need hearing aids have them. Democrats are currently debating whether to include Medicare coverage of hearing aids in a party-line infrastructure package later this summer.

The senator with oversight over antitrust matters praised the White House effort.

“I commend President Biden for this groundbreaking Executive Order, which will help restore competition to important sectors of our economy and will also protect workers from anticompetitive employment restrictions," Minnesota Democrat Amy Klobuchar, the chair of the Senate Judiciary subcommittee overseeing antitrust matters, said in a statement. “I look forward to working with the Administration to strengthen our nation’s competition policy, and I will continue to advance legislation in Congress to bring the lasting, transformative change we need to build a growing economy that works for all Americans.”