Author: Frances Ricks

The Patients Over Profits Act: What It Could Mean for Patients and Providers

The Patients Over Profits Act (“POP Act”) was introduced in both Houses of Congress this fall. The proposed Act addresses vertical integration in the healthcare system, specifically covering various stages of insurance coverage. Vertical integration, as opposed to horizontal integration, is when multiple stages of a certain industry are all controlled by the same company. For example, vertical integration in the healthcare industry happens in various situations, but in this context happens when a certain company owns or controls both the insurer and the physician. 

Multiple industries have been trending towards vertical integration, and the healthcare industry is no exception. The Supreme Court has stated that any sort of integration is “highly relevant” in deciding whether anticompetitive effects exist. The Patients Over Profits Act seeks to address the effects of vertical integration in the healthcare industry on patients. 

Specifically, the supporters of the POP Act argue that insurers can now control physician practices, and then set their own policies regarding insurance. Supporting documents explain that these financial incentives surrounding insurance companies can in turn affect the care and treatment patients receive from providers who are owned by companies who control both the physicians and the insurance payouts. Proponents of the Patients Over Profits Act not only argue that the financial incentives can influence clinical decision-making, but they also have the ability and desire to increase costs and drive up profits for their company.  Recently, many insurance conglomerates have purchased clinics and other physician-groups, resulting in vertical integration. For example, UnitedHealthcare purchased a large physician-owned clinic in Oregon, after they had already purchased other similar medical groups in Oregon. This type of integration is not unique to Oregon, it is happening throughout the United States.  

Specifically, the Patients Over Profits Act addresses physicians and insurers participating in Medicare and Medicaid. Medicare and Medicaid protect our most vulnerable citizens. Medicare provides healthcare assistance through a federally funded insurance program to people who are sixty-five or older, and others who qualify or have certain disabilities. Medicaid similarly provides insurance assistance through federal and state funding for low income citizens. The POP Act addresses these concerns in many ways. First, it seeks to prohibit ownership of both a health insurance company and a medical provider who participates in Medicare and Medicaid. Further, it seeks to control Management Services Organizations  (MSOs) through their Management Service Agreements (MSAs). MSOs provide non-clinical services to medical providers, and they use their MSAs, which are contractual agreements, to govern these services. The POP Act seeks to restrict the mechanisms these entities can use to control the medical services the MSOs provide. Further, the Act seeks to enable federal enforcement through the Department of Justice, Federal Trade Commission, and the Department of Health and Human Services regarding those insurance companies engaging in vertical integration, especially those participating in Medicare and Medicaid. 

In short, the Patients over Providers Act seeks to protect patients, rather than providers of healthcare services and insurance companies receiving all of the benefits. By requiring these entities to disclose their information and subject them to strict enforcement through federal agencies, the Act hopes to ensure patients receive care with fair payment. If the POP Act passes, health insurers will need to disclose interests they have in medical practices, or they will be subject to high financial penalties or suspension from federal health programs, such as Medicare and Medicaid. 

PBMs, Their Controversy, and Their Future

The debate of whether pharmacy benefit managers (PBMs) are necessary in the healthcare field has been ongoing for years and doesn’t seem to be slowing down. PBMs are essentially middlemen and act as negotiating entities in the prescription drug supply chain. PBMs have the opportunity to set the prices of drugs in various ways. For example, PBMs get discounts directly from drug manufacturers and then sell them to pharmacies, while retaining a portion of the profit. Therefore, pharmacies must price their drugs based on how much they purchase them from pharmacy benefit managers. 

There are many different sides to the debate of whether pharmacy benefit managers are necessary. The Pharmaceutical Care Management Association (PCMA), a national association that represents PBMS, argues that PBMs work to lower the price of prescription drugs for patients and payers. On their website, PCMA states that PBMs save payers and patients an average of $1,040 per person every year. On the other hand, PhRMA argues that patients and payers are paying more than they should because of PBMs. They claim that half of every dollar spent on medicine goes to middlemen and others. 

In recent years, there have been numerous issues surrounding PBMs. In 2023, the Federal Trade Commission (FTC) filed multiple 6(b) motions, a special kind of report to study markets and competitions, against multiple PBMs. Further, in September of 2024, the FTC filed an administrative action alleging that the three largest PBMs, Caremark Rx, Express Scripts, and OptumRx violated Section 5 of the FTC Act by utilizing the rebating system to inflate insulin prices. Following this, in November 2024, the PBMs sued to block the FTC’s administrative action. The PBMs allegedthat the suit should have been brought in federal court. Further, Express Script, one of the PBMs, filed another complaint alleging that the FTC’s b(6) reports on PBMs were biased. Specifically, they argue that the report violates the Administrative Procedure Act (APA) because it is arbitrary and capricious and not in the public interest. However, on February 18, 2025, the Missouri District Court refused to block the proceeding. The court explained that the PBMs were unlikely to succeed in their arguments. Therefore, this case is ongoing and could have major implications for the future of PBMs. The FTC’s case, while it focuses on insulin prices, targets the core of the business model used by PBMs. If they succeed, PBMs will have to change the way they operate, essentially changing the entire industry. On the other hand, if Express Script wins on the b(6) report claims, other PBMs who receive similar reports could be more aggressive with their responses to the FTC. Either way, the conflict between the FTC and PBMs will rage on for years to come. 

How Preemption Affects Healthcare in Local Communities

Federal, State, and local laws all play a massive role in perpetuating healthcare inequities. Preemption is the idea that when two authorities conflict with each other, the higher authority of law will displace the law of  lower authority. In recent years, many states have restricted local laws regarding public health policy through preemption.  This practice became popular in many states during the COVID-19 pandemic, where many local governments were enacting orders to deal with the pandemic.  Many states, such as Iowa, Oklahoma, and Tennessee in turn enacted statutes stating the local governments could not impose certain restrictions, such as requiring citizens to wear masks or show proof of vaccination.

However, problems with state preemption do not stop at purely public health matters. The effects of this new trend will have significant effects on many different regulations, such as economic opportunities, housing, employee benefits, and technology, which all, in turn, can have a severe effect on healthcare and access to healthcare. This use of preemption is important for many reasons, as the states can now utilize preemption to cause harm to many citizens, contributing to the already wide gaps of health disparity.

For example, laws such as requiring businesses to provide for paid family leave and raising the minimum wage for local workers are some proffered by local governments.   However, state laws have shut many of these laws down. Requiring businesses to provide paid family leave can promote public health when there is a short-term disability, sickness, or something else short-term in a family.  This time off would allow the family or person to recover, therefore promoting public health at the local level. However, if states do not allow for this paid time off, many are forced to work through their disabilities, sickness, or other problems. Further, another common local law is adding a local sales tax to smoking and vaping products to prevent youths from obtaining and using them.  However, these once again are struck down at the state level. These laws would prevent the adverse effects of smoking and vaping among youths, which could be a huge problem in the community, but the local government is preempted by state laws.

State legislatures are using this doctrine to advance anti-LGBTQ+ healthcare bills, especially in southern states.  In recent years, states have blocked local LGBTQ+ nondiscrimination protections, banning gender affirming healthcare, and targeted curriculum in schools. For example, in March 2024, Alabama recently passed an Anti-LGBTQ bill which preempts protections for LGBTQ individuals at the local level. There are numerous examples of these types of bills that are being introduced and passed into law daily. This is detrimental for LGBTQ+ healthcare, and is one of the many ways state preemption of local laws is affecting people today. 

Overall, preemption removes opportunities for effective, local public health action and instead prevents leaders from tackling problems in their community.  Local leaders are better at framing the issue, building local partnerships, and getting the message out to the communities. The weight of preemption today is much heavier than it was five years ago, and this needs to change for city leaders to effectively respond to the changes and problems in their communities. To combat these issues, federal and state governments should avoid framing preemptive legislation in a way that hinders public health initiative in the community. way that hinders public health initiatives in the community. The federal and state governments need to fully anticipate and understand the effects their preemptive laws will have on local communities moving forward.