High-profile mergers and acquisitions often garner both media attention and the watchful eye of the Federal Trade Commission (FTC). However, deals that fall below the $100-$110 million threshold escape the FTC’s purview, as they are not required to be reported. This gap in regulatory oversight has been brought into sharp relief by FTC Chair Lina Khan.
Speaking at the Oliver Wyman Health Innovation Summit 2023, Khan highlighted the significant blind spots in the FTC’s oversight of the healthcare sector. Her primary concern revolved around smaller, ‘below the radar’ deals in fields such as dialysis and medical devices that are contributing to the incremental consolidation of markets. Over time, such unchecked consolidation can lead to two or three entities dominating a market region.
To combat this, the FTC has proposed changes to the Hart-Scott-Rodino Form (HSR Form)—a pre-merger notification form. The proposed changes would necessitate companies to provide more detailed information about their projected revenue streams, the rationale behind their deal, and previous acquisitions, even those that were below the radar. Read more about the proposed changes here.
The FTC is also focusing on other key areas. One such area is its investigation into the practices of pharmacy benefit managers (PBMs) due to questions about the fairness of these practices from patients and pharmacies alike. Further, the FTC proposed a new rule to ban non-compete clauses in employment contracts after receiving thousands of comments from healthcare workers.
Another priority for the agency is consumer protection, specifically, addressing data privacy issues surrounding health apps. Popular health apps often collect sensitive health data from users, which raises the question of whether these apps are adequately protecting consumers’ data privacy. The FTC intends to ensure that if companies are collecting such sensitive health information, they aren’t quietly monetizing that data for advertising.
As smaller, ‘below the radar’ deals form the building blocks of consolidation in the healthcare sector, the FTC has been forced to strategize on innovative means to tackle this creeping problem. As Khan’s remarks illustrate, the FTC is tackling these ‘blind spots’ head-on, aiming to serve as an effective regulatory body for all mergers and acquisitions, not just those above the $100-$110 million threshold.