|Monday, July 12, 2021
Biden Executive Order covers non-compete agreements, hospital mergers, and prescription prices
Although numerous media reports indicate the President’s Executive Order earlier this week would ban noncompete agreements used by employers, it only, “encourages the FTC to ban or limit non-compete agreements.” The order also “encourages” the Federal Trade Commission (FTC) to work on the issue of hospital consolidations and directs the Food and Drug Administration (FDA) to work with states on importing prescription drugs from Canada and develop a plan to lower drug prices in 45 days.
The White House’s public fact sheet on the Executive Order offers no specifics to any non-compete restrictions the Biden Administration would ultimately like to see. Any action by the FTC will require a rulemaking process which normally take a considerable period of time and is unlikely to result in a complete ban on the use of non-competes. The formal Executive Order has not yet been posted to the Federal Register’s webpage for EOs.
Hospital & Insurance Carrier Mergers/Consolidation
The Executive Order, which contains 72 initiatives covering more than a dozen federal agencies, also focuses on mergers and consolidation. However, as with the non-compete component, the Executive Order simply ‘encourages’ the FTC to work on the issue of hospital consolidation, arguing that this practice can be harmful to patients.
According to the White House statement, 10 health care systems control a quarter of the market, due to mergers and consolidation in the health insurance industry has meant that many consumers have little choice.
Hospital Pricing Transparency
The EO directs HHS to support existing hospital price transparency rules and to finish implementing bipartisan federal legislation to address surprise hospital billing.
Insurance Marketplace Exchanges
The EO directs HHS to standardize plan options in the National Health Insurance Marketplace so people can comparison shop more easily.
The White House expressed concerns related to comparison shopping for plans on exchanges because they are too complicated, have many different services covered and numerous deductible options.
Prescription Drug Prices
· Directs the Food and Drug Administration to work with states and tribes to safely import prescription drugs from Canada, pursuant to the Medicare Modernization Act of 2003.
· Directs the Health and Human Services Administration (HHS) to increase support for generic and biosimilar drugs, which provide low-cost options for patients.
· Directs HHS to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging.
· Encourages the FTC to ban “pay for delay” (when drug companies agree not to compete) and similar agreements by rule.
Current Maine law on non-compete agreements
Law regarding non-compete agreements currently varies by state. A new Maine law was in enacted in 2019 concerning non-competes. The current state law allows non-competes, “only to the extent that they are reasonable and are no broader than necessary to protect one or more of the following legitimate business interests of the employer:
In addition, the 2019 Maine law bars an employer from non-competes for employees earning wages at or below 400% of the federal poverty level (approximately $50,000 a year) and also contains an exception for allopathic and osteopathic physicians.
Except for M.D.’s and D.O.’s, “the terms of a noncompete agreement do not take effect until after one year of the employee's employment with the employer or a period of 6 months from the date the agreement was signed, whichever is later.”
It also bans no-raid agreements (called “restrictive employment agreements”) in Maine. Note: For any Maine non-compete agreement that predates September 18, 2019, no changes are required.< Previous Article | Next Article >
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