New technologies are making it easier for companies to set prices and discriminate against individual consumers, the Biden administration’s top consumer watchdog said Tuesday.
Algorithms allow companies to set prices without explicitly consulting with each other, posing a new challenge for regulators overseeing the market, Federal Trade Commission Chairwoman Lina Khan said during a media event hosted by KFF.
“I think we could be entering a somewhat new era of pricing,” Khan told reporters.
Khan is considered one of the most aggressive antitrust enforcers in recent U.S. history and has been particularly concerned with the harm that technological advances can cause to consumers. According to Bloomberg News, antitrust regulators at the FTC and the Department of Justice filed a record number of merger challenges in the fiscal year that ended September 30, 2022.
Last year, the FTC successfully blocked biotech Illumina’s $7 billion acquisition of early cancer detection company Grail. The FTC, the Department of Justice and the Department of Health and Human Services launched a website called healthycompetition.gov on April 18 to make it easier for people to report suspected anticompetitive behavior in the healthcare industry.
The American Hospital Association, the largest industry group, has frequently criticized the Biden administration’s approach to antitrust enforcement. In comments in September on proposed guidance issued to companies by the FTC and Justice Department, the AHA said that “the guidance reflects a fundamental hostility to mergers.”
Price fixing removes competition from the market and generally makes goods and services more expensive. The agency has argued in court filings that price-fixing “is still illegal even when achieved through an algorithm,” Khan said. “There is no algorithmic exception to the antitrust laws.”
By simply using the same algorithms to set prices, companies can effectively charge the same prices “even if they don’t go into a back room, shake hands and set a price,” Khan said, using residential property managers as an example.
Khan said the commission is also looking at the use of artificial intelligence and algorithms to set prices for individual consumers “based on all this specific behavioral data about you: the websites you’ve visited, you know, who you’ve had lunch with.” , where you live.” “
And as health care companies change the way they structure their businesses to maximize profits, the FTC is changing the way it analyzes behaviors that could harm consumers, Khan said.
Hiring people who can “help us look under the hood of some inscrutable algorithms” is a priority, Khan said. She said it has already paid off in the form of legal action, “which is only possible because we had technologists on the team helping us figure out what these algorithms were doing.”
Traditionally, the FTC polices health care by challenging local or regional hospital mergers that have the potential to reduce competition and increase prices. But healthcare consolidation has evolved, Khan said.
Mergers of systems that don’t overlap geographically are increasing, she said. In addition, hospitals are now often buying up doctor’s practices, while pharmacy benefit managers are starting their own insurance companies or mail-order pharmacies – or vice versa – and pursuing “vertical integration” that can harm consumers, she said.
The FTC is hearing increasing complaints about “how these companies are using their monopoly power” and “exercising it in ways that result in higher prices for patients, less service and worse conditions for health care workers,” Khan said.
Monitoring non-compete clauses
Khan said she was surprised at how many health care workers responded to the commission’s recent proposal to ban “non-compete agreements” – agreements that can prevent employees from moving to new jobs. The FTC issued its final rule banning the practice on Tuesday. She said the ban was targeted at low-wage industries like fast food, but that many of the comments in favor of the FTC plan came from health care professionals.
Healthcare workers say non-compete agreements are “both personally devastating and also hinder patient care,” Khan said.
In some cases, doctors wrote that their patients were “really upset because they wanted to stay with me, but my hospital said I couldn’t,” Khan said. Some doctors ended up commuting long distances to avoid having to move the rest of their families after changing jobs, she said.
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