![]() ![]() Policymakers might consider whether contracts should, for example, be prohibited from referencing the formulary placement of a competitor in these cases. Because providers are generally unwilling to switch well-managed patients to a biosimilar, this can be a powerful exclusionary contracting practice. For example, biologic drug makers have been accused of using “rebate traps,” in which they condition large rebates for a biologic drug on the exclusion (or worse formulary placement) of a competing biosimilar. While legislative interest has arguably been strongest in provider and insurer markets, Congress should consider whether similar contracting provisions impede competition in the drug market. Undertaking these new activities may necessitate additional funding. Together, these two reforms would make it easier for regulators and to assess when more modestly-sized mergers present meaningful competitive concerns. In addition, the antitrust agencies could be tasked with systematically tracking market concentration levels in each health care market. This would directly increase the Federal Trade Commission’s (FTC) awareness of smaller mergers, particularly those that cumulatively have substantial impacts on market competition. In conjunction, the threshold amount for reporting mergers and acquisitions could be reduced. To enhance transparency, legislation could require pre-merger notification to antitrust agencies if the cumulative value of acquisitions by a single parent company in a given market exceeds the reporting threshold, even if the most recent acquisition itself is of lesser value than the threshold (either in general, or specifically for those within health care markets). ![]() Finally, antitrust authorities are not always successful in blocking mergers and acquisitions in court even when there is substantial evidence of net consumer harms. In addition, resource limitations at federal antitrust agencies may impede their ability to bring cases with merit. Moreover, limitations on available data can also make it difficult to determine which transactions raise antitrust concerns. Evidence shows that falling beneath this threshold greatly increases the chances of a transaction going unchallenged. Notably, institutional private equity firms often acquire large market shares through a series of small transactions that can be challenging to track. These smaller mergers can still be consequential. This means that many acquisitions – particularly of physician practices – go unnoticed until the merger has been finalized. First, pre-merger notification to federal antitrust authorities is only required for transactions over $111.4 million in 2023 (adjusted annually for inflation). Despite this evidence, many acquisitions that raise significant antitrust concerns go unchallenged by antitrust authorities or are allowed to proceed by the courts.
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