HHS Secretary Becerra to Focus on Anticompetitive Practices in Hospital, PBM and Pharmaceutical Industries

It has been suggested in some circles that the new Secretary of Health and Human Services, Xavier Becerra, pose a biggest threat than his predecessor, Alex Azar, to the pharmaceutical industry. However, that may not be the case, at least not when it comes to the price of prescription drugs per se. Instead, Becerra is likely to focus its attention more broadly on anti-competitive practices across the healthcare system, in all industries, including prescription drugs.

Although Becerra has long been an advocate for Medicare for All, legislatively, at present such a drastic overhaul of the healthcare system is failing. On the contrary, Becerra could become a antitrust Enforcing, and possibly calling for, legislation to curb anti-competitive practices by hospitals, pharmacy benefit managers (PBMs), and the pharmaceutical industry.

Becerra may be more comfortable resolving legal issues that compromise the optimal functioning of the healthcare market as a whole. These include topics such as anti-trust, collusion, late payment, and price transparency. Here he has a proven track record as a former California Attorney General.

Health monopolies in some markets, and oligopolies in others, have erected barriers to entry and contributed to high health care costs in the United States. Indeed, one of the main reasons for rising healthcare costs is the lack of an optimally functioning competitive market. In many markets, a small number of companies dominate healthcare services and prescription drug delivery options. As such, they use their control to hamper competition and raise prices.

Becerra has tackled these problems head-on in the country’s largest state. In his role as Attorney General, Becerra oversaw one of the largest healthcare antitrust settlements in US history, targeting Sutter Health, a San Francisco hospital conglomerate comprising numerous hospitals, health centers and medical clinics.

Across the political spectrum, there is a common concern about the negative effects hospital consolidation. Hospital mergers and acquisitions have not improved health outcomes, but increased health insurance bonuses. In addition, there is consensus among experts that hospital mergers and the consolidation of health insurers have led to higher prices for health services and technologies.

As California Attorney General, Becerra has demonstrated a willingness to tackle a multitude of health care actors in an effort to protect patients by enforcing state laws, but also by pushing for regulatory reforms to combat harmful anti-competitive practices. Becerra has pursued precedent-setting cases against hospital systems and pharmaceutical manufacturers who engaged in exclusionary practices.

Hospital spending is the primary driver of healthcare costs, as it accounts for well over a third of overall spending and its annual growth rate often exceeds that of prescription drugs. Yet it is a kind of sacred cow, which politicians tend not to shy away from. In light of Becerra’s past actions in favor of increasing surveillance of hospital mergers, as well as the Republican Party’s stance on antitrust issues, the issue of hospital consolidation offers a unique opportunity for bipartisan action in health policy.

There are also a number of initiatives by the Trump administration that can help Becerra’s cause, and that the Biden administration seems likely to retain, including the (sub) regulations promulgated during the Trump administration on transparency of government. hospital prices and health plans.

The final rule of transparency of hospital prices, which entered into force on January 1st this year, requires hospitals to publicly display standard fees for all items and services – including rates negotiated with each payer. In addition, the payor’s coverage transparency rule, which was finalized in October 2020, requires the publication of price information by insurers.

These rules are not essences. Price information can still be difficult for patients to interpret. In addition, it is evident that hospitals, which must publish previously confidential prices to comply with the new federal rule, have blocked this information from web searches. This is an area where Becerra could apply strict enforcement.

Recently, Becerra has championed the idea of ​​consolidating Medicare forces to negotiate prices on behalf of all Medicare beneficiaries. But, when it comes to direct price controls, it doesn’t initially appear that Becerra or the Biden administration will be as active as the Trump administration, at least not in terms of executive actions. This includes the so-called most-favored-nation policy advanced by the Trump administration – lowering drug prices in Medicare by tying the costs of certain drugs to the lowest prices in other countries – and ending the discounts. drug benefit managers in Medicare.

Nonetheless, Becerra is unlikely to remain silent on PBM discounts. Antitrust enforcement and regulatory reform are long overdue when it comes to pharmaceutical “discount traps”. These are defined as exclusionary contractual practices that a drug manufacturer deploys to limit the ability of competitors to gain privileged access to the formulary, or any access at all.

Branded manufacturers are leveraging their market leadership position by offering financial incentives to PBMs and health insurers in the form of “all or nothing” conditional volume discounts, in exchange for virtually exclusive positioning in the market. form. This may mean excluding competitors from the formulary entirely or significantly limiting access to the formulary to a competing drug by using step checks.

Here, Becerra could leverage the broad political support that exists to investigate the rebate walls and work on legislation to combat them.

In short, Becerra can tackle anti-competitive practices on the other side sectors to establish a more competitive market, thereby breaking the silo mentality that existed in the development of government health care policies.

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