Biden’s Pro-Competition Executive Order- A Mixed Bag For Healthcare

On July 9, 2021, President Biden issued an executive order (EO)[1] containing 72 directives to more than a dozen federal agencies, many of which have broad implications for healthcare. Specifically targeted are healthcare competition, hospital mergers, and pharmaceutical pricing. Several major goals include increasing competition, encouraging the development of generic drugs and biosimilars,  lowering the cost of prescription drugs, decreasing hospital consolidation and expanding hospitals in rural areas. The EO uses a multiprong approach directing Health and Human Services (HHS) to 1)  provide a plan within 45 days to address high prescription drug prices and price gouging, 2) direct the Food and Drug Administration (FDA) to work with states to import prescription drugs from Canada via §804 importation programs, 3) empower Medicare to negotiate pharmaceutical prices, 4) increase support for generic and biosimilar drugs. Importantly, it calls on the Federal Trade Commission (FTC) to ban “pay for delay” agreements between brand and generic pharmaceutical companies whereby pursuant to Hatch Waxman Act patent litigation settlements, manufacturers pay generic competitors to delay introduction of their competing generic version for a period for a time. Several provisions focus on hospitals and direct the FTC to tighten consolidation/merger guidelines and increase scrutiny of non-compete clauses that limit worker (especially physician) mobility and direct HHS to support hospital price transparency to avoid “surprise” patient bills.

            The Biologics Price Competition and Innovation Act (BCPIA)[2], enacted in 2010, approved a new regulatory pathway for biosimilar drugs and held great promise to save billions on the costs of biologics. Unfortunately, biosimilar uptake has been slow despite two FDA plans in 2017 and 2018 and the enactment of  biosimilar substitution laws similar to generic substitution laws in almost every state. To date, no “interchangeable” biosimilar has been FDA approved. The EO directs FDA to clarify the requirements for interchangeable biosimilars as well as the requirements for Biologics License Applications (BLAs).

            The EO is not a fait accompli and like the pro-competitive EOs of past presidents, it is subject to court challenges and administration changes.  Some of the provisions will require legislation and/or regulations subject to the lengthy Administrative Procedures Act public notice and comment. Various pharmacist and pharmaceutical manufacturers oppose provisions such as prescription drug importation, citing patient safety issues and unproven effects on prescription drug prices. Others, such as patient advocacy groups, are highly supportive. Some question how the increasing tangle of state non-compete laws which are vital to protecting investments and trade secrets will be affected by a national set of restrictions.

            Many of our clients are speculating how the interplay of existing statutory and regulatory authority and the implementation of these EO proposals will affect them. At Frier Levitt our healthcare attorneys have served as general counsel to hospitals, health systems, governmental regulators and senior policy makers and have the experience and expertise to help navigate the ever changing federal/state laws, regulations and mandates that effect your practice. Our FDA and IP attorneys provide legal counsel in patent law, government regulation, and the nuances of the BPCIA and implementing FDA Guidelines. Contact Frier Levitt to speak with an attorney.

 

[1] 86 FR 36987. Promoting Competition in the American Economy.

[2] 42 U.S.C. § 262(k) and (l).

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