Health Care and Competition Law and Policy

FEDERAL REGISTER NOTICE

AGENCY: Federal Trade Commission

ACTION: Notice of Public Workshop and Opportunity for Comment

SUMMARY: The Federal Trade Commission ("FTC" or "Commission") announces a workshop on September 9th and 10th, 2002, on "Health Care and Competition Law and Policy." The workshop will focus on the implications of competition law and policy for health care financing and delivery. The workshop will include consideration of the impact of competition law and policy on the cost, quality, and availability of health care, and the incentives for innovation in the field. The workshop will be held at and administered by the FTC.

Health care spending in the United States totals approximately $1.2 trillion per year, or 14 percent of GDP. Federal, state, and local governments account for roughly 46 percent of health care spending. Health care is the second-largest budget item for many states. It is exceedingly important that competition law and policy support and encourage efficient delivery of health care products and services. Competition law and policy should also encourage innovation in the form of new and improved drugs, treatments, and delivery options. Developing and implementing competition policy for health care raises complex and sensitive issues.

The Commission has considerable experience in the application of competition law and policy to health care.(1) This workshop will assist the Commission by providing timely information from varying perspectives on the impact of competition law and policy on the coverage and delivery markets in health care and on consumer/patient welfare. The goal is to promote dialogue, learning, and consensus building among all interested parties (including, but not limited to, the business, consumer, government, legal, provider, insurer, and health policy/health services/health economics communities). In addition to officials from the FTC, providers, academics, consumer representatives, employers, insurers, and managed care organizations will be invited to participate.

DATES: A two-day workshop will be held on September 9th and 10th, 2002. Any interested person may submit written comments responsive to any of the topics to be addressed; such comments should be submitted no later than September 30, 2002.

ADDRESSES: When in session, the workshop will be held in Room 432 at the FTC headquarters, 600 Pennsylvania Avenue, N.W., Washington, D.C. All interested parties are welcome to attend.

Written comments should be submitted in both hard copy and electronic form. Six hard copies of each submission should be addressed to Donald S. Clark, Office of the Secretary, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Submissions should be captioned "Comments Regarding Competition Law and Policy & Health Care." Electronic submissions may be sent by electronic mail to hcclp@ftc.gov. Alternatively, electronic submissions may be filed on a 3-1/2 inch computer disk with a label on the disk stating the name of the submitter and the name and version of the word processing program used to create the document.

FOR FURTHER INFORMATION CONTACT: David Hyman, Special Counsel, Office of General Counsel, 600 Pennsylvania Avenue, N.W., Room 568, Washington, D.C. 20580; telephone (202) 326-2622; e-mail: dhyman@ftc.gov. Detailed agendas for the workshop will be available on the FTC Home Page (http://www.ftc.gov/ogc/healthcare/i ndex.htm) and through Angela Wilson, Staff Assistant, at (202) 326-3190 shortly before the workshop is held.

SUPPLEMENTARY INFORMATION: Issues arising from the application of competition law and policy to health care have tremendous significance for the U.S. economy and consumer/patient welfare. The economic significance of health care is enormous, and will become even more so in the coming years. Consumer/patient welfare is maximized by a health care system that efficiently delivers to Americans the services they desire.

The Commission has an important role to play in this regard, through its dual areas of regulatory oversight of competition and consumer protection. Recent enforcement actions include several cases involving the pharmaceutical industry,(2) and a number of cases involving physician groups.(3) Other activity includes a forthcoming report from the Commission on generic drug competition, and a recent advisory opinion from the Bureau of Competition regarding "partial integration" of a physician group in the Denver area.(4) The antitrust bar and academic commentators also have raised numerous questions about the messenger model for negotiation with payers, "virtual" integration of physician groups, and the future direction of competition law and policy in an evolving health care market.

Antitrust analysis traditionally has focused on restrictions to price competition. Competition routinely takes place, however, on both price and non-price parameters. Some have suggested that competition policy has given insufficient weight to non-price competition when analyzing particular transactions. Others have argued that competition policy must co-exist with other complicated laws and policies, and that the multitude of statutory commands sends inconsistent signals to providers who are simply trying to obey the law.

The application of competition law and policy to health care raises complex issues. These issues likely will become even more significant in the coming years, as health care accounts for an increasing share of GDP and of federal, state, and local budgets. Thus, a workshop to explore these issues is timely. The workshop is intended to further fact gathering, learning, dialogue, and discussion among the affected parties, and result in a greater understanding of and consensus about the approaches to policy in these areas that are most likely to benefit patients/consumers.

The workshop on September 9th and 10th, 2002, will provide a "snapshot" of the coverage and delivery markets, and review the results of an empirical study of antitrust litigation during the past fifteen years, and the Commission's recent activity in the area. A variety of interested parties will be invited to give their perspective on the following general issues: the effect of competition law and policy on the health care industry, including the cost, quality, and availability of goods and services and the incentives for innovation; the current enforcement environment; the manner in which non-price competition (including but not limited to quality of care) is factored into competition law and policy; the consistency of competition law and policy with the requirements and incentives created by other federal and state laws and policies; and whether the 1996 Statements of Antitrust Enforcement Policy in Health Care jointly issued by the Commission and the Department of Justice need to be updated. This list is not exhaustive, and parties submitting written comments do not have to address each issue.

By direction of the Commission.

Donald S. Clark
Secretary

Endnotes

1. See, e.g., Health Care Services and Products Division, FTC Antitrust Actions in Health Care Services and Products, http://www.ftc.gov/bc/hcindex/hcupdate020118.pdf.

2. See, e.g., Schering Plough Corp., Dkt No. 9297 (June 27, 2002) (Initial Decision) (available at http://www.ftc.gov/os/caselist/d9297.htm) (claims resolved as to American Home Products with a consent order on Apr. 2, 2002); Biovail Corp. (consent order accepted for public comment, Apr. 23, 2002); Hoechst Marion Roussel, Inc., Dkt. No. 9293 (May 8, 2001) (consent order); Abbott Laboratories, No. C-3945 (May 22, 2000) (consent order) and Geneva Pharmaceuticals, Inc., No. C-3946 (May 22, 2000) (consent order); FTC v. Mylan Laboratories et al., (D.D.C., filed Dec. 22, 1998; amended complaint filed Feb. 8, 1999) Civ. No. 1:98CV03114 (http://www.ftc.gov/os/1999/9902/mylanamencmp.htm).

3. See, e.g., Obstetrics and Gynecology Medical Corporation of Napa Valley, No. C-4048 (May 14, 2002) (consent order); Physician Integrated Services of Denver Inc., (consent order accepted for public comment, May 13, 2002); Aurora Associated Primary Care Physicians, L.L.C., (consent order accepted for public comment, May 13, 2002).

4. Staff Advisory Opinion Re MedSouth, Inc., reflected in letter dated February 19, 2002, from Jeffrey W. Brennan, Assistant Director, Bureau of Competition, to John J. Miles, Ober, Kaler, Grimes & Shriver, http://www.ftc.gov/bc/adops/medsouth.htm.