S. 3822: Break Up Big Medicine Act

The "Break Up Big Medicine Act" aims to promote competition within the healthcare market by preventing certain health care companies from having ownership connections that can create conflicts of interest. Specifically, the bill addresses the relationships between pharmacy benefit managers, insurers, drug wholesalers, and medical service providers. Here's a breakdown of the key provisions:

Key Provisions

• Prohibition on Common Ownership: The bill makes it illegal for corporate entities to own both insurance companies (including pharmacy benefit managers) and medical providers (such as hospitals or physician practices) or management service organizations. Essentially, one company cannot control both the insurance side and the provider side of healthcare delivery.
• Divestment Timelines: Companies that are in violation of this provision must divest from either the insurance companies or the medical providers within one year of the bill's enactment.
• Antitrust Enforcement: The Federal Trade Commission (FTC) and the Department of Justice (DOJ) will have the authority to enforce these laws, including oversight on required divestitures. If a company fails to comply, up to 10% of their profits can be withheld monthly until the issue is resolved.
• Civil Actions: Several entities, including state attorneys general and private citizens, can bring civil lawsuits against companies that violate the rules outlined in the legislation. If successful, plaintiffs may be awarded treble damages (three times the amount of damages proved), attorney fees, and other costs.
• Regulatory Reporting: The FTC and DOJ will provide quarterly reports to Congress on the progress of compliance with the Act, including updates on divestitures.
• Angling for Patient Protection: The intent behind these regulations is to protect patients, reduce healthcare costs, and restore a competitive market by dismantling the vertical integration that has become prevalent in healthcare systems. This could help minimize the conflicts of interest that arise when one company controls multiple aspects of healthcare delivery.

Findings Leading to the Bill

The bill is based on several findings related to the consolidation of the healthcare market:

• Many large health care platforms control both insurance services and provider services, diluting competition.
• Significant numbers of physicians are now employed by corporate entities, which can influence how patients receive care.
• Major drug wholesalers and pharmacy benefit managers also tend to be linked with larger healthcare conglomerates, creating environments where business decisions might favor profits over patient care.

Enforcement Mechanisms

The legislation allows for:

• Jurisdiction for enforcement shared between the FTC and DOJ.
• Creation of civil lawsuits by state officials and private citizens if they believe their interests or health are adversely affected.
• Requirements for the FTC to issue regulations to ensure adherence to the provisions without reducing accountability.

Overall Intent

The overarching goal of the "Break Up Big Medicine Act" is to dismantle monopolistic structures in healthcare, thereby improving competition. The Act aims to shift the balance of power in healthcare back towards consumers and providers, potentially leading to better care and more choices for patients.

Relevant Companies

• UNH - UnitedHealth Group: As a large insurer, changes in ownership rules could affect their ability to operate integrated care systems.
• CNC - Centene Corporation: Similar to UnitedHealth, their integrated model might face compliance challenges under the new rules.
• CVS - CVS Health: As a pharmacy benefit manager and pharmacy, CVS may be required to separate their insurance offerings from retail operations.