President Biden on Friday signed a wide-ranging executive order (EO) that includes about a dozen initiatives that aim to bolster competition in the health care industry.

Those initiatives largely fall into four buckets: health care mergers, prescription drugs, transparency, and labor. Let's take each of these in turn.

Health care mergers

In the EO, Biden calls out consolidation practices in both the hospital and health insurance industries. Hospitals and health systems in particular have seen robust consolidation activity in recent years and data from both Moody's Investor Service and Kauffman Hall suggest the trend is likely to continue. Research has tied consolidation to higher prices and limited choices for consumers—and Biden's EO aims to address those outcomes by encouraging the Department of Justice (DOJ) and Federal Trade Commission (FTC) to review and revise merger guidelines for hospitals.

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Newly confirmed FTC Chair Lina Khan and acting Assistant Attorney General of DOJ's Antitrust Division Richard Powers already have committed to conducting a joint review of their merger guidelines and updating them as needed.

The degree of federal scrutiny will depend on the new guidelines. But it's likely this will mean health care leaders will need to meet a higher bar to prove the value of their proposed mergers and acquisitions—and that cost structure alone is unlikely to be sufficient going forward.

This should not come as a surprise to industry leaders. Even before Biden assumed office, FTC under former President Trump was taking a closer look at health care M&A. If anything, Biden's EO—when viewed alongside his past comments and choice to lead FTC—suggests his administration does not plan to ease up.

Prescription drugs

Another area where the Biden administration is not easing up is prescription drug prices. This executive order:

• Directs FDA to work with states and tribes to safely import drugs from Canada
• Directs HHS to support generic and biosimilar drugs
• Directs HHS to deliver a plan to combat high prescription prices within 45 days
• Encourages FTC to ban "pay for delay" and similar agreements among pharmaceutical companies
• Directs HHS to consider proposing a rule within 120 days to make hearing aids available over the counter
• Encourages the National Institute of Standards and Technology to abandon a Trump-era proposed rule that would have eased so-called "march-in rights"

Drug importation has been a hot topic since Biden assumed office, as many industry observers were unsure whether he would seek to carry out his predecessor's policies. And until now, the administration has sent potentially conflicting signals. Shortly after taking office, HHS asked a federal court to dismiss a lawsuit challenging the Trump administration's drug importation rules, noting that the rule had not yet been implemented. And just last week, HHS withdrew a Trump-era request for information on rules to allow drug makers to reimport insulin and individuals to import certain drugs.

This EO makes clear that the Biden administration plans to carry out the Trump administration's policy favoring drug importation, but they are likely to put their own spin on the rules. In fact, a quick glance at the Office of Management and Budget's regulation page shows a new Most Favored Nation Model proposed rule pending review.

Transparency

The EO also includes directives intended to help consumers shop for affordable health plans and provider services. This executive order:

• Directs HHS to "support existing hospital price transparency rules and to finish implementing bipartisan federal legislation to address surprise hospital billing"
• Directs HHS to standardize plan options in the exchange marketplace

Hospital and insurer price transparency has been another must-watch area for industry analysts anxious to see how the Biden administration would approach the Trump-era rules. (The insurer price transparency rules are slated to begin next year, and the hospital price transparency rules are in full effect—though their impact has been a point of continued debate.) While the EO does not indicate whether HHS will seek to bolster enforcement of the rules, the directive can be read as a clear commitment to continuing the Trump-era rules.

Conversely, the exchange directive would mark a return to Obama-era rules as marketplace plans were required to offer standard benefits in 2017 and 2018. But how Biden's HHS implements those rules could have different effects for patients' out-of-pocket costs. Given that the Biden administration has already issued proposed rules for the 2022 exchanges, it's likely we won't see standard benefits until at least 2023.

Labor changes

This executive order also included several initiatives related to labor. For example, the EO:

• Encourages FTC to ban or limit non-compete agreements
• Encourages FTC to ban occupational licensing restrictions that may impede economic improvement
• Encourages FTC and DOJ to bolster antitrust guidance to prevent employer collaboration to suppress wages or reduce benefits

Again, the degree of impact will depend on the final guidance or regulations that FTC and DOJ produce. But this should capture health care workforce leaders' attention as non-compete agreements are standard practice in the health care sector, and it's clear the Biden administration will take a closer look at other labor-related practices.

Final takeaway

There is a lot to unpack in this executive order, and the devil will be in the details as agencies translate the EO into regulations and guidance. But for health care industry leaders, the initiatives largely signal more continuity with Trump-era policies to crack down on practices tied to rising consumer care costs and federal spending.

This doesn’t mean that the Biden administration will seek to make some of these policies—such as drug reimportation—its own. But the grounding principles of policies designed to increase scrutiny on health care M&A activity, increase prescription drug competition, and give consumers access to comparable and affordable health plans and services are unlikely to change anytime soon under the Biden administration.