WASHINGTON, D.C. - The U.S. Senate Committee on Commerce, Science, and Transportation held a subcommittee hearing today on Competition in the Health Care Marketplace.

 

 

Mr. Richard A. Feinstein, Director, Bureau of Competition, Federal Trade Commission

 

Dr. Len M. Nichols, Director, Health Policy Program, New America Foundation

 

Mr. David Balto, Senior Fellow, Center For American Progress

 

Mr. Mark Riley, Executive Vice President, Arkansas Pharmacists Association

 

Ms. Grace-Marie Turner, President, Galen Institute

 

 

“If we are serious about providing every American with access to affordable, meaningful health care coverage, we absolutely must start by confronting its soaring costs.  The average American family today pays twice as much for its health care as it did a decade ago.  A big reason behind rising health care costs is the coercive practices that manipulate the market, mask true cost, and burden health care consumers with even greater risk while others reap the profits.  This is absolutely unacceptable to me.”

“Anti-competitive practices among health care industry players are an overlooked component of skyrocketing healthcare costs,” Pryor said.  “Today’s hearing helped showcase the lack of transparency in the health care market, the unequal bargaining power among health industry sectors and the conflicts of interest that exist.  These issues are certainly food for thought as we look at how to make health care coverage more affordable and accessible for every American.”

“Some have suggested that the antitrust laws act as barriers to health care provider collaborations that could lower costs and improve quality. That is simply wrong. Properly applied, antitrust standards distinguish between price fixing by health care providers, which is likely to increase health care costs, and effective clinical integration among health care providers that has the potential to achieve cost savings and improve health outcomes.”

“In economic terms, we pay more on average than the cost of efficient production. In fact, much of our production is amazingly inefficient. As a consequence of both problems, many patients receive care that is of sub-optimal quality. In short, we get very poor value for our health care dollars.”

“I have a simple and vital message for this Committee: the Ingenix example is only the tip of the iceberg. The fundamental elements for a competitive market are transparency and choice and in both respects, health insurance markets are clearly broken. Few markets are as concentrated, opaque and complex, and subject to rampant anticompetitive and deceptive conduct. As the health care debate progresses, many advocate for limited reform of the health insurance system. Their belief is that it is a fundamentally sound market and with a little dose of additional regulatory oversight, all the ills of the market will be cured. They could not be more mistaken.”

“The Pharmacy Benefit Manager (PBM) market is highly concentrated and that enables them to exercise ‘monopsony’ or buyer power to reduce compensation to the pharmacies that provide dispensing services. ...The savings from reducing compensation [to pharmacies] is not passed on to buyers in lower prices because of the market power of PBMs. Moreover, ultimately the consumer of drugs is harmed because there are fewer pharmacies available because of reduced reimbursement rates, or other forms of pharmacy services diminish. Leaving the PBM scheme unfettered and without oversight to ensure true open competition, along with leaving matters to litigation, is unworkable.”

“Congress is attempting to address in major health reform legislation the many problems in our health sector: Health insurance and health care still cost too much. As a result, tens of millions of Americans don’t have health insurance, and many more are worried they are one pink slip away from losing their coverage. The lack of competition in health insurance in many states limits the options for coverage and over-regulation drives up costs. And the costs of Medicare and Medicaid are swallowing up a growing share of federal and state revenues, compromising other functions of government and threatening huge tax increases just to pay for current entitlement commitments.”

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