On July 9, 2021, the Biden Administration issued an Executive Order on “Promoting Competition in the American Economy.” The Order is notable in its breadth and commitment to a coordinated federal government approach to competition issues. The Order outlines several priority areas related to the healthcare sector, including several directives designed to address pricing and access issues for prescription drugs. Companies in this space will want to review the Order carefully and give advance thought to their strategies for engaging with regulators around these initiatives.
“Whole of Government” Approach
In his remarks, President Biden emphasized that the Order “commits the federal government to full and aggressive enforcement of our antitrust laws.” And the White House Press Office has stated that the Order establishes a “whole-of-government effort to protect competition in the American economy.”
To coordinate, promote, and advance these whole-of government efforts, the Order establishes a White House Competition Council “to address overconcentration, monopolization, and unfair competition in or directly affecting the American economy[.]” The Competition Council will be chaired by the Director of the National Economic Council and include representatives from the Treasury, Defense, Justice, Agriculture, Commerce, Labor, Health and Human Services, and Transportation Departments, as well as representatives from the Office of Information and Regulatory Affairs (“OIRA”). The Order includes over 70 initiatives aimed at encouraging agencies to aggressively address alleged anticompetitive practices and trends in many sectors through rulemaking, increased enforcement, or other agency actions.
On top of agency-specific initiatives, the Order directs OIRA to consider requiring all federal agencies to include an assessment of “the effects on competition and the potential for creation of barriers to entry” in regulatory impact analyses for proposed rulemakings.
Healthcare and Intellectual Property Initiatives
The Order highlights pharmaceutical pricing as a top priority of the Administration, noting that the Administration will “support aggressive legislative reforms that would lower prescription drug prices, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and through other related reforms.” The Order draws a comparison between prescription drug pricing in the United States and abroad, stating that “Americans are paying too much for prescription drugs and healthcare services—far more than the prices paid in other countries.”
The Order points to patent-related issues in the healthcare sector as a key impediment to low drug prices, stating for example that “too often, patent and other laws have been misused to inhibit or delay—for years and even decades — competition from generic drugs and biosimilars, denying Americans access to lower-cost drugs.”
Regarding the intersection of healthcare and intellectual property, the Order directs the Secretary of Health and Human Services (“HHS”) to:
- Continue to clarify and improve the approval framework for generic drugs and biosimilars and support biosimilar product adoption by providing effective educational materials and communications to healthcare providers, patients, and caregivers;
- Continue to update the FDA’s biologics regulations to clarify requirements and procedures for the review and submission of Biologics License Applications;
- Write a letter within 45 days to the Under Secretary of Commerce for Intellectual Property and Director of the USPTO describing any concerns of the FDA regarding any unjustifiable delay of generic drug and biosimilar competition beyond that reasonably contemplated by applicable patent laws; and
- Support market entry of lower-cost generic drugs and biosimilars, including promptly issuing Covered Product Authorizations (“CPAs”) to assist product developers with obtaining brand-drug samples.
The Order encourages the FTC to ban “pay for delay” and similar agreements by rule. It also directs the Secretary of HHS to work with the FTC to identify and address any efforts to impede generic drug and biosimilar competition, including through false, misleading, or otherwise deceptive statements about generic drug and biosimilar products and their safety or effectiveness.
Some federal regulators have already taken steps to implement the Order. For example, the U.S. Department of Justice (“DOJ”) Antitrust Division has reportedly established an internal Task Force that will be charged with developing an action plan for new interagency programs to support federal regulators’ consideration of competition issues that cut across multiple agencies’ purviews. Both the traditional antitrust enforcement agencies (the DOJ and FTC) and others have announced new actions implementing various provisions of the Order. However, HHS has not yet issued a response.
These initiatives mean that companies should anticipate competition-related inquiries and questions from a wide variety of federal agencies, not only the DOJ and the FTC. Companies should consider a holistic approach to prepare for increased regulatory oversight and engagement to address the Biden Administration’s commitment to a whole-of-government approach to competition issues. In the short term, companies should:
- Closely monitor the timelines and directives outlined in the Order;
- Consider whether and how to engage policy makers on specific initiatives of interest;
- Respond to requests for comment on rulemaking or regulations where available and appropriate;
- Evaluate business practices and potential acquisitions through a lens of potential regulatory skepticism and prepare to defend their conduct as good for competition and patients; and
- Evaluate proposed business strategies with an eye towards how competition aspects might be received by interested regulators beyond just the FTC and Antitrust Division.
Please contact us if you would like to further discuss the potential implications of and our recommendations in response to the Order.