The executive order targets four areas "where lack of competition in healthcare increases prices and reduces access to quality care" -- hospital and health insurance consolidation, high drug prices, and hearing aids.
President Joseph. R. Biden's sweeping executive order to promote competition across a broad range of industries also puts high drug prices, and consolidations of healthcare providers and payers in the crosshairs.
The executive order, signed by Biden on Friday, establishes a broad, multi-departmental "whole-of-government effort to promote competition in the American economy," and includes 72 initiatives by more than a dozen federal agencies.
For the healthcare sector, the order targets four areas "where lack of competition in healthcare increases prices and reduces access to quality care" -- hospital consolidation, health insurance consolidation, high drug prices, and hearing aids.
Hospitals
"Hospital consolidation has left many areas, especially rural communities, without good options for convenient and affordable healthcare service," the administration said. "Thanks to unchecked mergers, the ten largest healthcare systems now control a quarter of the market. Since 2010, 139 rural hospitals have shuttered, including a high of 19 last year, in the middle of a healthcare crisis. Research shows that hospitals in consolidated markets charge far higher prices than hospitals in markets with several competitors."
Claiming that "hospital mergers can be harmful to patients, Biden's order "encourages" the Department of Justice and the Federal Trade Commission to review and revise merger guidelines to ensure that patients aren't harmed.
The order also directs the Department of Health and Human Services to support hospital price transparency rules and to quickly implement federal legislation that address surprise medical bills.
Health Insurance
Biden's order notes that "consolidation in the health insurance industry has meant that many consumers have little choice when it comes to selecting insurers. And even when there is some choice, comparison shopping is hard because plans offered on the exchanges are complicated—with different services covered or different deductibles."
Biden has ordered the Department of Health and Human Services to "standardize plan options in the National Health Insurance Marketplace so people can comparison shop more easily."
Prescription Drugs
The order notes that Americans pay more than 2.5 times as much for the same prescription drugs as peer countries, and sometimes much more.
"Price increases continue to far surpass inflation. As a result, nearly one in four Americans report difficulties paying for medication, and nearly one in three Americans report not taking their medications as prescribed," the order said. "These high prices are in part the result of lack of competition among drug manufacturers. The largest pharmaceutical companies are able to wield their market power to reap average annual profits of 15-20%, as compared to average annual profits of 4-9% for the largest non-drug companies."
The administration accused drug makers of using "pay for delay" ploys -- in which brand-name drug manufacturers pay generic manufacturers to stay out of the market – to stifle competition.
"That has raised drug prices by $3.5 billion per year, and research also shows that “pay for delay” and similar deals between generic and brand name manufacturers reduce innovation—reducing new drug trials and R&D expenditures," the administration said.
Biden has ordered the Food and Drug Administration to work with states and tribes to safely import prescription drugs from Canada, pursuant to the Medicare Modernization Act of 2003.
The order also directs HHS to increase support for generic and biosimilar drugs, and issue a comprehensive plan within 45 days to combat high drug prices and price gouging.
The order also "encourages" the FTC to ban “pay for delay” and similar agreements.
Hearing Aids
The order notes that hearing aids cost $5,000 a pair, on average, and that only 14% of the 48 million Americans with hearing loss use them, often because those costs are not covered by health insurance.
"A major driver of the expense is that consumers must get them from a doctor or a specialist, even though experts agree that medical evaluation is not necessary," the order states. "Rather, this requirement serves only as red tape and a barrier to more companies selling hearing aids. The four largest hearing aid manufacturers now control 84% of the market."
Congress in 2017 passed a bipartisan act to allow hearing aids to be sold over the counter, but the Trump Administration's FDA never issued the necessary rules.
Biden's order directs HHS to consider issuing proposed rules within 120 days for allowing hearing aids to be sold over the counter.
“Hospital consolidation has left many areas, especially rural communities, without good options for convenient and affordable healthcare service. Thanks to unchecked mergers, the ten largest healthcare systems now control a quarter of the market.”
President Joseph R. Biden, executive order
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
Photo credit: White House in Washington DC, USA, vector illustration isolated on white background. By Fandorina Liza / Shutterstock
KEY TAKEAWAYS
Americans pay more than 2.5 times as much for the same prescription drugs as peer countries, and sometimes much more.
Biden's order "encourages" the DOJ and the FTC to review and revise merger guidelines for hospitals to ensure that patients aren't harmed.
Americans pay more than 2.5 times as much for the same prescription drugs as peer countries, and sometimes much more.
Hearing aids cost $5,000 a pair, on average, and that only 14% of the 48 million Americans with hearing loss use them, often because those costs are not covered by health insurance.