The Federal Trade Commission is ramping up scrutiny of healthcare markets, and physicians are likely to feel the effects.
Here are 10 things to know:
1. The FTC is forming a dedicated Healthcare Task Force. FTC Chair Andrew Ferguson directed multiple agencies to establish the task force, coordinating efforts across the Bureau of Competition, Bureau of Consumer Protection, Bureau of Economics, the Office of Policy Planning and the Office of Technology, according to a March 20 memo.
2. The task force takes a unified, agencywide approach. Rather than siloing enforcement by department, the task force will lead targeted enforcement and advocacy efforts, develop agencywide investigation strategies, proactively identify opportunities to file amicus briefs and statements of interest, and flag emerging areas of concern across healthcare markets, according to the FTC.
3. It will reach beyond the FTC. The task force will collaborate with other federal agencies and law enforcement partners, including HHS and the Department of Justice, broadening the scope of oversight across healthcare, the FTC said.
4. The FTC sees consolidation as a direct threat to patients and physicians. Mr. Ferguson cited consolidation and anticompetitive practices as key drivers of higher prices, reduced care quality and stifled innovation. Healthcare accounts for roughly 18% of the U.S. economy, yet many patients continue to face high costs and limited access, which the FTC attributes largely to concentrated markets, per the March 20 memo.
5. U.S. healthcare markets are already highly concentrated. Markets have grown significantly more concentrated over the past two decades. Research cited by Lexology finds roughly 80% to 90% of U.S. hospital markets are “highly concentrated” under Justice Department-FTC merger guidelines, typically dominated by one to three systems. According to a Government Accountability Office report , hospital-physician consolidation is associated with 17% higher commercial office-visit prices, based on studies from 2010 to 2016.
6. Physician practice consolidation is under the microscope. Physician markets have consolidated rapidly through hospital acquisitions and private equity investment. According to the GAO, nearly half of U.S. physicians are now employed by or affiliated with hospital systems. Consolidation is linked to 3% to 5% higher inpatient hospital prices, based on 2009 to 2015 data.
7. Health insurance and drug distribution markets are monopolistic. According to the American Medical Association, 95% of U.S. commercial health insurance markets are highly concentrated with a single insurer holding at least half the market share in many metro areas. Three firms control more than 90% of wholesale pharmaceutical distribution, which is a structure drawing increasing regulatory scrutiny, according to Lexology.
8. The FTC is already acting. Recent enforcement actions include a settlement with Express Scripts intended to lower patients’ out-of-pocket drug costs, including for insulin, by as much as $7 billion over 10 years, according to the FTC. The agency also blocked Edwards Lifesciences’ $945 million acquisition of JenaValve Technology and pressured Alcon to abandon its proposed acquisition of Lensar, which the FTC said would have combined the top two competitors in femtosecond laser systems used in cataract surgery.
9. The FTC is scrutinizing innovation pipelines, not just existing markets. The Edwards-JenaValve challenge is particularly notable, according to Lexology. No transcatheter aortic valve replacement-aortic valve regurgitation device is currently FDA-approved, yet the FTC moved to preserve competition in the development phase, arguing that eliminating rivalry between the only two firms in U.S. clinical trials would threaten future innovation, quality and patient access, according to the agency’s complaint.
10. The task force will be judged by outcomes, not its creation. Standing up a task force does not create new legal authority, according to Lexology. Such bodies tend to be most effective when they accelerate case selection and embed expertise into active investigations and least effective when they generate reports and news releases without enforcement follow-through.
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