For Release:
November 7, 2002 FTC Chairman
Announces Public Hearings on Health Care and Competition Law and Policy to Begin in
February 2003
Chairman Timothy J. Muris in a speech today announced that
the Federal Trade Commission will hold hearings on health care and competition law and
policy commencing in February 2003 and continuing throughout the year. The hearings will
be hosted jointly by the FTC and the Antitrust Division of the Department of Justice
(DOJ).
Muris said that the hearings will examine the state of the
health care marketplace and the role of competition, antitrust, and consumer protection in
satisfying citizens' preferences for high-quality, cost-effective health care. Preliminary
topics for the hearings include hospital mergers, the significance of non-profit status,
vertical integration, quality and efficiencies, the boundaries of the state action and
Noerr-Pennington doctrines, monopsony power, the adequacy of existing remedies for
anticompetitive conduct, and the implications of the Commission's consumer protection
mandate with regard to the performance of the health care financing and delivery markets.
Muris's speech, titled Everything Old is New Again:
Health Care and Competition in the 21st Century, was the keynote address for the 7th
Annual Competition in Health Care Forum. The Forum was held in Chicago, Illinois, on
November 7-8, 2002. In the comprehensive policy speech, Muris discussed the nature of the
current health care marketplace, the importance of competition in health care, the kinds
of anticompetitive behavior the Commission is seeing, the agency's enforcement and
research agenda, its efforts to protect and promote quality and efficiencies, and the
Commission's recent initiatives in health care.
Muris noted that the FTC continues to see a wide variety of
overt anticompetitive practices in the health care marketplace, along with some new
variations. The Commission continues to bring cases against physicians for price-fixing -
much like those brought by the FTC throughout the last 20 years. However, Muris pointed
out that several of the new cases involve an unprecedented number of doctors and some
consultants who allegedly coordinated the price-fixing under the guise of assisting in
negotiations with payors.
Conversely, Muris noted, the Commission's pharmaceutical
docket is a new variation on an old theme, involving alleged anticompetitive conduct by
branded and generic pharmaceutical companies. Pharmaceutical cases account for the
majority of the Commission's antitrust resources devoted to health care and a sizeable
percentage of the Bureau of Competition's budget.
Muris discussed the difficulties the Commission and the DOJ
have had in litigating hospital mergers in the past eight years and described how the
Commission is working to address these challenges. In particular, he noted, the Bureau of
Economics and the Bureau of Competition are conducting a retrospective review of a number
of consummated hospital mergers to determine whether there is evidence of anticompetitive
effects. Muris also described how the Bureau of Competition's new Merger Litigation Task
Force will enhance the FTC's ability to bring hospital merger cases and reviewed the
important role played by the DOJ in implementing competition law and policy, particularly
with regard to insurance.
Muris noted that the Commission also has an important
consumer protection role in the market for health care goods and services and that
deceptive and unfair marketing practices are far too common in health care. Citing an
example of the Commission's work, he noted Operation Cure.All, which challenged deceptive
and unsubstantiated health claims for serious illnesses. Muris also addressed the
implications of the relative scarcity of information about the cost and quality of health
care.
Muris emphasized that competition law does not hinder the
delivery of high-quality care. He pointed out that the Commission is always willing to
consider arguments about how a particular transaction or conduct will lead to efficiencies
in the financing or delivery of health care services, and it will pay close attention to
such arguments in weighing the competitive implications. Clinical integration that
increases quality of care is one example, he said, of permissible collective conduct that
may not violate the antitrust laws because there are substantial pro-competitive benefits.
Muris observed that although there is plenty of
misinformation and misapprehension about the role of the Commission and the application of
the antitrust laws to health care, the FTC's basic task remains the same as it has always
been: to ensure that the approximately 15 percent of our nation's gross domestic product
devoted to health care, amounting to about $1.3 trillion per year, is spent in robustly
competitive markets. Aggressive competition promotes lower prices, higher quality, greater
innovation, and enhanced access to care. More concretely, in health care, competition
results in new and improved drugs, cheaper generic drugs, treatments with less pain and
fewer side effects, and treatments offered in a manner and location consumers desire.
The Commission, he said, does not have a pre-existing
preference for any particular model for the financing and delivery of health care. Such
matters are best left to the marketplace. What the Commission does have, Muris noted, is a
commitment to vigorous competition along both price and non-price parameters. The FTC
supports initiatives to enhance quality of care and ensure the free-flow of information
because such initiatives are pro-competitive. There is great flexibility for health care
providers to develop and implement novel financing and delivery arrangements without
running afoul of the antitrust laws, although, not surprisingly, the FTC draws the line at
anticompetitive conduct.
Muris continued by stating that there is no inherent
inconsistency between vigorous competition and the delivery of high-quality health care,
and interference with competition is far more likely to decrease consumer welfare than
increase it. As the Supreme Court observed in Indiana Federation of Dentists, he
said, such interference necessarily and improperly preempts "the working of the
market by deciding . . . that customers do not need that which they demand."(1)
"Health care is the area of the economy where the
promise implicit in the creation of the Commission - that there are substantial consumer
welfare benefits and synergies from creating an agency combining administrative expertise
and enforcement authority, addressing antitrust, consumer protection, and competition
advocacy - has been most fully met," Muris concluded. "Since 1975, when the
Commission sharpened its focus on this area, through six presidents and eight
Chairpersons, the Commission has maintained a leadership role in implementing competition
law and policy in health care."
1. Indiana Fed'n of Dentists v.
FTC, 476 U.S. 447, 459 (1986). |