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FTC Chief Warns of Healthcare Price Fixing Risks Amid Tech Advancements

 |  April 24, 2024

In a recent media event hosted by KFF, Lina Khan, chair of the Federal Trade Commission (FTC), issued a warning about the potential for price fixing in healthcare facilitated by technological advancements. Khan highlighted how algorithms enable companies to fix prices without explicit coordination, presenting a new challenge for regulators.

Khan emphasized the potential harm that technological advances can inflict on consumers. She pointed out that algorithms are increasingly utilized by companies to discriminate against individual consumers, ushering in what she termed “a somewhat novel era of pricing.”

The FTC, along with the Justice Department, has been particularly active in challenging mergers, setting a record for merger challenges in the previous fiscal year. Notably, the FTC successfully blocked Illumina’s $7 billion-plus acquisition of cancer-screening company Grail last year.

To empower consumers in reporting suspected anticompetitive behavior in the healthcare industry, the FTC, Justice Department and Health and Human Services Department launched healthycompetition.gov on April 18.

Read more: Federal Agencies Investigate Private-Equity Impact on Healthcare Costs

However, the American Hospital Association (AHA), a major industry trade group, has criticized the Biden administration’s approach to antitrust enforcement, expressing concerns about proposed guidelines that they argue reflect hostility towards mergers.

Price fixing, which eliminates market competition and drives up costs for consumers, remains illegal even when facilitated through algorithms, Khan stressed. She explained how companies can effectively set identical prices using algorithms without direct coordination, likening it to residential property managers using similar algorithms.

Furthermore, Khan highlighted the FTC’s scrutiny of artificial intelligence and algorithms used to set prices for individual consumers based on behavioral data. As healthcare companies evolve their business structures to maximize profits, the FTC is adapting its analytical approach to address potential consumer harm.

Khan emphasized the importance of hiring technologists to decipher complex algorithms, citing successful legal actions enabled by their expertise. She noted that while the FTC traditionally policed healthcare through challenging local or regional hospital mergers, the landscape of consolidation in healthcare has evolved, necessitating a nuanced regulatory approach.

Source: Washington Post