White House Targets Health Care Industry with Executive Order Promoting Competition in the Economy

On July 9, 2021, the White House issued a far-reaching Executive Order on Promoting Competition in the American Economy (the “Executive Order”), promoting a “whole-of-government” approach to promote competition in the economy with a specific focus on the health care industry. The Executive Order specifically states that Federal Government “inaction” has contributed to industry consolidation and weakened competition over the last several decades, which denies Americans the benefits of an open economy and widens racial, income and wealth inequality.

The Executive Order includes 72 initiatives by more than a dozen federal agencies to address pressing competition problems across the economy, which “driv[e] up prices for consumers” and “driv[e] down wages for workers.” Among the numerous initiatives outlined, the Executive Order:

1. Calls on leading antitrust agencies, including the Attorney General and the Chair of the Federal Trade Commission (“FTC”) to fairly and vigorously enforce antitrust law and to review and consider revising the horizontal and vertical merger guidelines;
2. Reaffirms the Federal Government’s authority to challenge previously-consummated transactions that violate the antitrust law;
3. Encourages federal agencies with overlapping jurisdictions to cooperate and coordinate efforts in oversight and investigation authorities;
4. Establishes the White House Competition Council within the Executive Office of the President to coordinate, promote, and advance Federal Government efforts to address overconcentration, monopolization, and unfair competition in the economy; and
5. Charges various federal agencies, including the U.S. Department of Health and Human Services, with initiatives to address industry-specific problems caused by consolidation.

The Executive Order specifically targets, among other industries, the health care industry, finding prices for health care services and prescription drugs are “far more than the prices paid in other countries” and hospital consolidation has left many areas with “inadequate or more expensive health care options.” Specifically, the Executive Order tackles the following four areas where a lack of competition in the health care industry “increases prices and reduces accessibility to quality care”:

1. Hospitals;
2. Prescription drugs;
3. Hearing aids; and
4. Health insurance.

In addition, to allow workers to bargain for higher wages and better work conditions, the Executive Order directs a review of the increasing use of non-compete agreements across all industries. The Executive Order Fact Sheet states that “banning or limiting” non-compete agreements and unnecessary occupational licensing requirements will make it easier for workers to change jobs and will help raise wages. Specifically, the Executive Order directs the FTC Chair to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to “curtail the use of unfair non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

The Executive Order is a clear signal to the health care industry and others that the Federal Government has a renewed focus on promoting competition through increased scrutiny and enforcement under its antitrust laws. Still, it is important to note that the Executive Order does not change the antitrust laws, although the various initiatives outlined may ultimately result in new or revised regulations or guidance as well as increased scrutiny and enforcement. Accordingly, particular attention should be paid to the Federal Government’s oversight and enforcement actions with respect to proposed transactions, as well as potential regulatory changes in the space.