On July 9, 2021, President Biden signed an executive order instructing various federal agencies to review their regulations and policies with an eye towards encouraging competition, including taking action to reduce healthcare costs.
In addition to other competition concerns, the order focuses on two main sources of rising healthcare costs. The first is the rising cost of prescription drugs. According to the administration, Americans pay at least 2.5 times as much for prescription drugs as peer countries. In order to check these cost increases, the order instructs the FDA to work with states and tribes to safely import prescription drugs from Canada and directs HHS to look for ways to increase support for generic drugs. It also instructs the FDA to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging. Further, the order encourages the FTC to ban “pay for delay” and similar agreements (under which drug manufacturers pay generic drug producers to delay releasing cheaper versions of their drugs into the market) by rule.
The second source of rising healthcare costs is hospital consolidation. According to the administration, the ten largest healthcare systems now control a quarter of the market, allowing these systems to set higher prices for the services they provide. Although the previous administration instituted price transparency regulation, hospitals have been slow in complying with them, further obscuring the price increases they charge. The order instructs the FTC and the Justice Department to review and revise their merger guidelines to ensure that patients are not harmed by healthcare system mergers, and directs HHS to support existing hospital price transparency rules and to finish implementing surprise billing regulations.
Also of note is the order’s direction to HHS to propose rules within 120 days that allow hearing aids to be sold over the counter. HHS is also instructed to standardize plan options in the federal insurance marketplace so that people can comparison shop more easily.
Employers should be aware of these upcoming regulatory efforts to curb costs, which may impact healthcare plan premium rates.
Source: NFP BenefitsPartners