FTC Testifies on Antitrust Enforcement in the Health Care Industry

Agency Focuses on Practices That Could Increase Costs, Reduce Quality of Service

The Federal Trade Commission testified today before Congress on how it protects and promotes competition in the health care industry to help make sure U.S. consumers get high-quality care at competitive prices. Continuing effective antitrust enforcement is a critical part of any plan to improve the health care system, according to the testimony. The testimony also describes the FTC’s efforts, along with other agencies, to provide guidance on how health care professionals can form collaborations envisioned under the Affordable Care Act consistent with the antitrust laws.

Before the U.S. House Judiciary Committee’s Subcommittee on Courts and Competition Policy, the FTC’s Bureau of Competition Director Richard Feinstein said antitrust enforcement improves health care by preventing or stopping anticompetitive agreements to raise prices, and fostering competition that spurs innovation, improves quality, and expands patients’ access to care.

“The FTC has an important role to play: by protecting and promoting competition we can help to lower costs and improve quality. Years of experience have shown us that continued effective antitrust enforcement is a necessary component of any plan to improve health care,” Feinstein said.

Chief among the anti-competitive tactics targeted by the FTC are “pay-for-delay” drug patent settlements, in which a branded drug company compensates a generic competitor for not bringing its lower-cost drug to market for a certain period of time. This tactic delays patient access to less-expensive generic drugs, and the FTC has estimated that it costs U.S. consumers $3.5 billion a year.

The testimony explains how the FTC has worked to preserve competition in health care markets by carefully scrutinizing a number of proposed deals involving hospitals, drug manufacturers, and medical device makers. In one case, the FTC challenged the proposed merger of Inova Health System and Prince William Hospital in Virginia in 2008. After the Commission and the Virginia Attorney General sued to block the deal, the companies abandoned their planned merger.

The testimony also explains that antitrust laws do not act as barriers to health care provider collaborations that could lower costs and improve quality. Instead, the FTC has challenged price-fixing and boycott agreements in which health care providers jointly seek to increase the fees they get from health plans. However, bona fide, efficiency-enhancing joint ventures are not necessarily anticompetitive.

Finally, the testimony addresses Accountable Care Organizations, or ACOs. The Affordable Care Act encourages the formation of ACOs, to allow a variety of market participants to provide coordinated patient care that can improve quality and lower costs. To examine the competitive issues created by the development of ACOs, the FTC recently held a workshop with other federal agencies and interested stakeholders. The workshop was part of the FTC’s ongoing effort to provide clarity and guidance to the health care community as it moves forward in implementing the new health care law.

The Commission vote approving the testimony and its inclusion in the formal record was 5-0. It can be found on the FTC’s website and as a link to this press release.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

Mitchell J. Katz
Office of Public Affairs

(FTC File No. P859910)
(Antitrust HC Testimony.final.wpd)