Pledges to reduce health care costs, spending growth could violate antitrust laws, lawyers say

U.S. antitrust laws could affect health care industry groups' efforts to work together to rein in health care costs, the New York Times reports (Pear, New York Times, 5/27).

In a letter sent to President Obama on May 10, a coalition of groups -- the American Medical Association, the American Hospital Association, Pharmaceutical Research and Manufacturers of America, the Advanced Medical Technology Association, America's Health Insurance Plans and the Service Employees International Union -- pledged to reduce the annual health care spending growth rate by 1.5%. The groups did not elaborate on what specific measures they would use to achieve such reductions, but the Obama administration has requested specific plans from the groups by June 1 (Kaiser Daily Health Policy Report, 5/26).

According to the Times, many of the plans being considered by the health care industry would require greater cooperation across health care providers. Robert Leibenluft, a former Federal Trade Commission official, said, "Any agreement among competitors with regard to prices or price increases -- even if they set a maximum -- would raise legal concerns." In addition, while Obama is asking for specific plans from the health care industry, the administration has not offered any relief from antitrust laws, the Times reports. Furthermore, during his campaign Obama pledged to increase enforcement of antitrust laws, according to the Times.

Antitrust laws have had a negative effect on previous health reform efforts, the Times reports. In 1993, the drug industry established a voluntary cost control plan that limited each drug company's annual increase in the average price of prescription drugs to the increase in the Consumer Price Index, but the Department of Justice ruled that the proposal would violate antitrust laws. DOJ officials said that the U.S. Supreme Court made it clear that setting price maximums was akin to setting price minimums, which is illegal.

In a letter to the Senate Finance Committee, AHA wrote that uncertainty regarding the enforcement of antitrust laws "makes it difficult for a hospital and doctors to collaborate to improve care" and reduce costs. AMA has asked Congress to amend antitrust laws to allow physicians to collectively negotiate with insurers over fees and other concerns, but FTC repeatedly has designated the practice illegal price-fixing, according to the Times.

FTC officials said that consumers could benefit from cooperation among health care industry groups but that cooperation also could lead to increased bargaining power for physicians and hospitals, making it easier for them to set prices and eliminate competition (New York Times, 5/27).

Reform Developments

Summaries of a number of developments and issues related to health care reform appear below.

• Sales tax: A controversial proposal to enact a national sales tax, also known as a value-added tax, is beginning to receiving attention as a means of reducing the national budget deficit and funding health reform, the Washington Post reports. Senate Budget Committee Chair Kent Conrad (D-N.D.) said, "There is a growing awareness of the need for fundamental tax reform," adding, "I think a VAT and a high-end income tax have got to be on the table." Kenneth Baer, a spokesperson for White House Office of Management and Budget Director Peter Orszag, said that a VAT is "unlikely to be in the mix" as a means for financing health care reform, adding that it is "popular with academics," including White House health care adviser Ezekiel Emanuel, "but highly controversial with policymakers." The Post examined several studies that indicate how a VAT could help pay for health reform and changes to Medicare and Medicaid (Montgomery, Washington Post, 5/27).

• Conservative ad campaigns: Conservative groups are beginning to launch advertising campaigns that compare Democrats' proposed health care system to that in countries in which the government has more control over health care services, the Wall Street Journal reports. According to the Journal, the ads highlight longer wait times and difficulty getting prescription drugs in the foreign systems. The Americans for Prosperity Foundation on Wednesday will launch a $1.7 million television ad campaign the home states of eight lawmakers who are considered influential in the health care debate. The ads compare Democratic proposals to overhaul the U.S. health system to Canada's health care system and feature patients who have had long waits for needed surgeries. Conservatives for Patients' Rights, as part of a $20 million campaign, began airing ads in March. On Sunday, CPR will air 30-minute segments in the Washington, D.C., area that feature commentary from unpaid physicians and patients from Canada and the United Kingdom describing the shortcomings of their nations' health care systems (Adamy, Wall Street Journal, 5/27).

• Rx CEOs: Drugmaker CEOs are attempting to guide policymakers away from making reductions to prescription drug prices by participating in the debate regarding an overhaul of the U.S. health care system, the Journal reports. Industry executives and lobbyists have expressed their support for measures that would reduce hospital and insurance costs and shift insurance coverage toward preventive care, which could increase sales for drugs that treat chronic conditions (Rockoff, Wall Street Journal, 5/27).