On July 9, 2021, the Biden Administration issued an executive order (EO), “Promoting Competition in the American Economy,” to address corporate consolidation, lack of competition and high prices for consumers, and low wages.[i] The health care portion of the EO focuses on improving competition to address health care prices and access to care in four areas: prescription drug pricing, hospital consolidation and price transparency, the health insurance marketplace, and the cost of hearing aids. In addition, the EO includes initiatives for federal agencies to address problems in labor markets, transportation, agriculture, internet service, technology, and banking.

EO Supports Drug Importation, Generics and Biosimilars, Combatting High Drug Prices and Banning “Pay for Delay”

People in the United States pay more than two and a half times as much for the same prescription drugs as those in peer countries, resulting in many Americans struggling to pay for their medications.[ii] The EO asserts that these high prices are caused in part by a lack of competition among drug manufacturers. “Pay for delay” agreements allow brand-name drug manufacturers to pay generic drug manufacturers to stay out of the market, reducing competition. Research shows “pay for delay” and other deals between drug manufacturers leads to increased drug prices and reduces innovation.[iii]

The EO addresses the high cost of drugs as follows:

• Encourages the Federal Trade Commission (FTC) to ban “pay for delay” and similar deals between drug manufacturers.
• Directs Department of Health and Human Services (HHS) to increase support for generic and biosimilar drugs.
• Directs HHS to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging.
• Directs the Food and Drug Administration (FDA) to work with states and tribes to import lower-cost prescription drugs from Canada.

The importation of prescription drugs from other countries was also supported by President Trump; the administration included this policy in executive orders issued in July 2020.[iv]

HHS to Support Hospital Price Transparency, Increased Attention to be Given to Hospital Mergers

The EO addresses concerns that hospital consolidation has caused a lack of affordable care options for patients in certain areas, especially those in rural communities. The EO asserts consolidation has led to a reduced number of rural hospitals and increased prices, and addresses this issue as follows:

• Encourages the Justice Department and the Federal Trade Commission (FTC)to review and revise hospital merger guidelines.
• Directs HHS to support the existing hospital price transparency rules and surprise hospital billing legislation.

The hospital price transparency rule, introduced during the Trump administration, went into effect on January 1, 2021.[v] It requires hospitals to publicly display negotiated rates with insurers.[vi] The rule was challenged by hospital and provider groups, who claimed the rule does not help patients, creates more burden for providers, and could result in anticompetitive actions.[vii] The rule was upheld by a federal appeals court just days before it went into effect.[viii] However, recent reports have shown that some hospitals are not complying with the requirements.[ix]

Furthermore, the Center for Medicare and Medicaid (CMS) recently released an interim final rule with comment period[x] implementing several provisions from the No Surprises Act of 2021[xi], restricting excessive out-of-pocket costs to consumers due to surprise billing and balance billing.

HHS to Standardize Insurance Marketplace Plan Options

Consolidation in the health insurance marketplace has led to limited consumer choice. Comparing plans offered on the exchanges can be difficult for consumers. As a result, this EO directs HHS to standardize plan options in the National Health Insurance Marketplace.

Hearing Aids to be Sold Over the Counter

In 2017, Congress passed the Over-the-Counter Hearing Aid Act of 2017, bipartisan legislation that created a class of hearing aids to be solid directly to consumers without needing to see a licensed professional. The class would be regulated by the Food and Drug Administration and was passes as a rider to the FDA Reauthorization Act of 2017.[xii] However, HHS under the Trump administration never issued the necessary regulations to implement this law. This EO directs HHS to consider issuing proposed rules to allow hearing aids to be sold over the counter within 120 days.

[i] https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/ ; https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/

[ii] https://www.rand.org/news/press/2021/01/28.html

[iii] https://www.ftc.gov/news-events/media-resources/mergers-competition/pay-delay ; https://www.nber.org/system/files/working_papers/w28964/w28964.pdf?utm_campaign=PANTHEON_STRIPPED&amp%3Butm_medium=PANTHEON_STRIPPED&amp%3Butm_source=PANTHEON_STRIPPED

[iv] https://www.modernhealthcare.com/politics-policy/trump-issues-drug-pricing-executive-orders-340b-outpatient-drug-pay

[v] https://www.hhs.gov/sites/default/files/cms-1717-f2.pdf

[vi] https://www.cms.gov/hospital-price-transparency

[vii] https://www.aha.org/news/headline/2021-01-07-aha-urges-hhs-exercise-enforcement-discretion-hospital-price-transparency ; https://www.aha.org/lettercomment/2020-12-21-aha-letter-biden-harris-transition-team-price-transparency-rule

[viii] https://www.modernhealthcare.com/law-regulation/appeals-court-rejects-hospitals-price-transparency-challenge

[ix] https://www.beckershospitalreview.com/finance/most-hospitals-opting-for-noncompliance-fee-over-disclosing-prices.html ; https://khn.org/news/article/hospital-prices-must-now-be-transparent-for-many-consumers-theyre-still-anyones-guess/

[x] https://www.cms.gov/newsroom/fact-sheets/what-you-need-know-about-biden-harris-administrations-actions-prevent-surprise-billing

[xi] Title I (the No Surprises Act) of Division BB of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) available at: https://www.congress.gov/bill/116th-congress/house-bill/133. The legislation directed HHS to issue implementing regulations by July 1, 2021.

[xii] https://www.congress.gov/115/plaws/publ52/PLAW-115publ52.pdf