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Executive order targets hospital consolidation, non-competes

July 9, 2021

President Joe Biden is issuing an executive order today that aims to increase competition in the U.S. economy. The order targets the healthcare industry by calling for:

  • Increased scrutiny on healthcare mergers
  • Increased competition among drug manufacturers to lower costs for patients
  • Continued support of the price transparency rules issued by the Trump administration
  • The FTC to ban or limit non-compete agreements for physicians

Healthcare is one of four key markets for which antitrust agencies will be instructed to focus in particular.

According to this fact sheet issued by the White House, “Hospital consolidation has left many areas, especially rural communities, without good options for convenient and affordable healthcare service.” The order states that hospital mergers can be harmful to patients and encourages the Justice Department and FTC to review and revise their merger guidelines to ensure patients are not harmed by such mergers.

Regarding drug pricing, the order directs the FDA to work with states and tribes to safely import prescription drugs from Canada, pursuant to the Medicare Modernization Act of 2003. It also directs the HHS to increase support for generic and biosimilar drugs, which provide low-cost options for patients.

President Biden calls for action to increase price transparency, directing HHS “to support existing hospital price transparency rules and to finish implementing bipartisan federal legislation to address surprise hospital billing.”

While hospital officials have pushed back on the requirement to post prices online in the past, there will be additional opposition to Biden’s non-compete stance. Non-competes do have a pro-competitive use that benefits patients, providers and health systems, and without effective non-competes, healthcare systems and healthcare investors may be reluctant to invest in healthcare enterprises that will expand healthcare services to citizens in need.

It remains to be seen how this order will be received and enforced.

To learn more about the executive order, read this Fact Sheet issued by the White House.

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