Freedom Line Blog

The Tennessee General Assembly recently passed important legislation to repeal the state’s Certificate of Need (CON) requirements for acute care hospitals and other critical healthcare services. Pending Governor Bill Lee’s signature, the bill paves the way for more choices and better-quality care for patients across the state.

CON laws compel hospitals and other healthcare providers to demonstrate a “need” for and to receive special government permission to build new facilities and offer certain new healthcare services. Not only is that approval process governed by a government board unaccountable to voters, but incumbent providers also get a say in whether new facilities are permitted to open or new services can be offered by competitors in their geographic footprint.

Simply put, CON laws empower a board of unelected government bureaucrats to insulate incumbent healthcare providers from competition and limit access to care for patients.

The detrimental effects of CON laws have been felt across the Volunteer State. According to a recent report by the Beacon Center of Tennessee, which examined the impact of the state’s CON laws over a more than two-decade span from 2000 to 2022, as many as 5.5 million Tennesseans were denied increased access to healthcare services and Tennessee communities lost over $700 million dollars in direct investment as a result of the state’s CON denials during that time period.

Given the sizable negative impact CON laws have, the efforts of numerous legislators from across the state to pass significant reform, including phasing out Tennessee’s CON requirements for acute care hospitals, merits significant praise.

CFIF, therefore, joins countless Tennessee patients, community leaders, healthcare providers and other leaders in expressing appreciation for the General Assembly’s passage of critical CON reform this session. Tennessee patients can now look forward to increased access to the affordable, high-quality care they depend on closer to home.

Specifically, CFIF would like to thank the following members of the Tennessee General Assembly for their thoughtful leadership and many years of hard work on this issue:

• House Speaker Cameron Sexton (R-Crossville)
• Senator Bo Watson (R-Hixson)
• Representative Johnny Garrett (R-Goodlettsville)
• Senator Rusty Crowe (R-Johnson City)
• Representative David Hawk (R-Greeneville)
• Senator Brent Taylor (R-Memphis)
• Senator Shane Reeves (R-Murfreesboro)
• Senator John Stevens (R-Huntingdon)
• Senator Paul Bailey (R-Sparta)
• Senator Kerry Roberts (R-Springfield)
• Senator Bobby Harshbarger (R- Kingsport)
• Representative William Lamberth (R-Portland)
• Representative Jeremy Faison (R-Cosby)
• Representative Clark Boyd (R-Lebanon)
• Representative Mary Littleton (R-Dickson)
• Representative Esther Helton-Haynes (R-East Brainerd)
• Representative Ron Travis (R-Dayton)
• Representative Lowell Russell (R-Vonore)
• Representative Mike Sparks (R-Smyna)
• Representative Jay Reedy (R-Erin)
• Representative Jody Barrett (R-Dickson)
• Representative Bud Hulsey (R-Kingsport)
• Representative Tim Rudd (R-Murfreesboro)
• Representative Sabi Kumar (R-Springfield)
• Representative Tim Hicks (R-Gray)
• Representative Jake McCalmon (R-Franklin)
• Representative John Crawford (R-Bristol/Kingsport)
• Representative Paul Sherrell (R-Sparta)
• Representative Rick Eldridge (R-Morristown)
• Representative Aron Maberry (R-Clarksville)
• Representative Rebecca Alexander (R-Jonesborough)
• Representative Justin Lafferty (R-Knoxville)
• Representative Timothy Hill (R-Blountville)

The U.S. House Energy & Commerce Committee’s Health Subcommittee today will host the third hearing in its health care affordability series, specifically examining the role providers and hospitals play in shaping the cost of care for Americans.

While the hearing will likely examine numerous issues, there is none more ripe for reform than the flawed 340B drug pricing program.

Originally enacted to help eligible safety-net providers buy medicines at steep discounts and pass the savings on to lower-income and vulnerable patients, the program has ballooned as a revenue stream for many participating hospitals and contract pharmacy chains.

As the size and complexity of the 340B program has expanded, participating hospitals and contract pharmacies have instead used the program to increase their own revenues – to the tune of $1.8 billion from 2024 to 2025 alone – rather than helping consumers, who were the law’s intended beneficiaries.

Study after study into that failure over the years has exposed how participating providers hoard tens of billions of dollars each year from drug sales occurring under the 340B program.  In fact, some of those hospitals went so far as to charge full prices to patients for discounted drugs, only to pocket the difference.  Federal agencies tasked with administering the 340B program have highlighted transparency concerns and the inability to accurately audit the program.

Fortunately, the Trump Administration has offered a proposal to actually improve matters for consumers.

Under the administration’s proposal, the 340B program would require hospitals to file claims with drug manufacturers for rebates, rather than the current process of granting those hospitals up-front drug price discounts.  With that change, the program would create a paper trail to prevent hospitals from exploiting the discounts in the shadows.

There have been similar successful real-world reforms enacted in other federal drug pricing programs such as the Medicaid Drug Rebate Program of 1990 and the Department of Veterans Affairs Federal Supply Schedule.  Each of those reforms created a more transparent paper trail that enhanced program efficiency in the way that the Trump Administration’s 340B program reform idea proposes.

Simply put, the 340B program, however well-intentioned, has proved to be a prescription for disaster.  In practice, its murky logistics has ended up benefiting participating providers at the expense of patients and increased healthcare costs.

Accordingly, as Congress continues its effort to reduce healthcare costs, it should focus on where reform and savings constitute low-hanging fruit:  the 340B program and the way it has to date served the interests of participating hospitals rather than patients.

Last week was National Hospital Week, when we recognized and expressed our gratitude for hospitals, health care facilities and caregivers who provide vital health care services across the nation. National Hospital Week also serves as a reminder that antiquated and burdensome Certificate of Need (CON) laws create government red tape and needlessly empower unelected bureaucrats to limit access to care.

Recently, the Beacon Center of Tennessee released a report showing how, in the last two decades, CON laws have prevented up to 63 new hospitals in Tennessee and deprived Tennessee communities of $733.6 in direct investment. The report also found that Tennessee has seen a 70 percent decrease in applications for new health care facilities and expanded services since 2004 due to the state’s CON laws.

Florida has seen a rapid increase in new hospitals and other healthcare facilities since its Certificate of Need requirements were dropped a couple of years ago.

It’s no wonder that South Carolina in recent weeks repealed its CON laws and Georgia is working to follow suit.

CON laws limit patient access to care and increase health care costs by preventing new health care facilities from opening, particularly in rural communities that desperately need health care infrastructure.

Lawmakers in states where CON laws still exist should recognize the obvious harm they cause and move to fully repeal them.

The South Carolina Legislature voted last week to repeal the state’s Certificate of Need (CON) laws. The legislation, which immediately eliminates CON requirements for the majority of health care facilities and establishes a three-year CON “sunset” period for existing hospitals, serves as a massive victory against unelected bureaucrats who have been unnecessarily empowered to block patients’ access to new healthcare facilities and services.

In Tennessee, similar antiquated CON laws continue to stifle the free market, limit access to affordable health care choices and deprive communities across the state of critical jobs and investment. Tennessee’s CON laws require health care providers in the state, even private ones, to receive government permission slips approved by unelected government bureaucrats prior to opening new facilities or offering new health care services.

CFIF has been actively advocating full repeal of Tennessee’s CON laws.

The Beacon Center of Tennessee outlined the devastating impact CON laws have on the state in a report released earlier this year. Over the last twenty years, CON laws have:

• Cost the state more than 60 additional hospitals – many in underserved or rural areas.
• Denied 5.5 million Tennesseans increased access to much-needed new health care services.
• Deprived local communities of $733 million dollars of direct investment.

Florida, a conservative state that prioritizes free-market solutions and medical freedom, has experienced a rapid increase in new health care facilities since repealing its Certificate of Need requirements.

Tennessee should follow its Southern neighbors’ example and eliminate its remaining CON laws during next year’s legislative session. Doing so would remove burdensome and unnecessary government red tape that currently serves as a barrier to new health care choices, restore medical freedoms and increase access to affordable, high-quality health care for Tennesseans across the state.

Steve Forbes, chairman and editor-in-chief of Forbes, recently released a video calling for citizens and local groups to “demand their legislators get rid of” Certificate of Need (CON) laws. Currently, 35 states and Washington, D.C. still have CON laws on the books.

Forbes outlines the flawed CON approval process that requires special government permission for private health care providers to build new hospitals or expand the services they offer. Additionally, Forbes explains how CON laws disrupt competition in the healthcare market and limit access to care while increasing costs for consumers.

In Tennessee, where CFIF has been actively advocating full repeal of the state’s remaining CON laws, such laws continue to stifle the free market, limit access to health care choices for Tennesseans and deprive communities of critical investment. A recent Beacon Center of Tennessee report found that over the last two decades, the state’s CON laws have cost Tennessee up to 63 hospitals, many of them in underserved rural areas. In total, 5.5 million Tennesseans have been denied increased access to health care services and local communities have lost out on over $700 million dollars in direct investment as a result of the state’s CON laws.

KEY EXCERPTS FROM THE VIDEO:

• “CONs restrict competition and promote regional and local monopolies, which means higher prices and restricted access to medical care. After all, approval boards are often loaded with personnel tied to existing facilities. It’s like a panel of people from McDonalds passing judgment on an application for a new Wendy’s. To obtain a certificate of need is not cheap, what with unavoidable outlays for lawyers and consultants, not to mention unnecessary time delays.”
• “CONs are costly. The Kaiser family Foundation found that states with CON laws have higher health care costs than states that don’t. A study from the Mercatus Center at George Mason University confirms that CON states have fewer hospitals, fewer beds and fewer service centers per capita than CON-free states.”

Watch the Video Here

During his 2019 State of the Union address, President Donald Trump confidently stated, “We will never be a socialist country.”  Today, however, his Department of Health and Human Services (HHS) is pushing an International Pricing Index (IPI) proposal, a socialist policy idea that would peg what Medicare Part B pays for prescription drugs to prices in other developed countries. Simply stated, the IPI proposal would require the U.S. to adopt the price controls of foreign nations that have socialized medicine policies.

Here’s hoping that at this year’s SOTU, President Trump sticks to his guns and continues to reject socialist policies, including HHS’s destructive IPI proposal.

To understand how bad the IPI proposal is, consider this: Its two most vocal proponents in Congress are Speaker of the House Nancy Pelosi and self-proclaimed socialist Senator Bernie Sanders.

Speaker Pelosi’s proposed H.R. 3, among other things, applies the IPI rate-setting model to the U.S. drug market.  It’s noteworthy that the White House Council of Economic Advisors rightly says that, “the threat [H.R. 3] poses to continued medical innovation will harm American patients in ways that far outweigh any benefits.”  That’s because rate setting restricts access to life saving medicines.  For example, in many European counties, patients have to wait about a year, sometimes longer, to access new cancer medicines.  No patient should suffer that risk. In the U.S., in contrast, patients wait an average of only 3 months and have access to a far greater variety of medicines.

The IPI proposal would also diminish U.S. economic leadership in biopharma innovation.  That industry is an economic engine that supports 4 million U.S. jobs and invests billions of dollars in R&D in the United States – roughly $80 billion in 2018 alone.

Simply put, HHS’s misguided IPI proposal amounts to socialized medicine. If President Trump is true to his declaration at last year’s SOTU, he will banish it to the dustbin of history.

Healthcare costs, including pharmaceutical costs, remain a legitimate concern.  But the Trump Administration Department of Health and Human Services (HHS) is about to commit a needless unforced error.

The issue in question is an effort to force pharmaceutical companies to announce “list price” of drugs that they advertise.

A similar effort was recently introduced as legislation in Congress by Senator Dick Durbin (D – Illinois), which is itself proof of the wrongfulness of the idea.  A coalition of conservative and libertarian voices, including CFIF, stopped Senator Durbin’s effort.  But for some reason the HHS announced intent to impose the mandate via regulation, reminiscent of Barack Obama’s “pen and phone” manner of presiding.

Here’s why this is a terrible idea.

First, a drug’s “list price” is more likely to confuse consumers than enlighten them.  The reason is that what consumers actually pay for a drug is almost always very different, and much lower, than its list price.  Most patients’ drugs are subsidized by co-pays or co-insurance programs, whether via Medicare, Medicaid or insurance companies.  Insurance companies themselves typically don’t even pay the full list price, since they also receive various rebates and discounts from pharmaceutical sellers.  Overall, approximately 9 out of 10 consumers pay below the technical list price.  Consequently, compelling advertisers to state the list price in ads would mislead consumers into assuming that their out-of-pocket cost would be higher than they price they’d actually pay.

That hardly advances the goal of informing consumers.

An even more fundamental problem with the contemplated HHS mandate is that it would violate the First Amendment by compelling speech.

Under First Amendment free speech application, including commercial speech, courts strictly scrutinize any effort by government to force private citizens or entities to what it wants them to say.  Only where the compelled speech is purely factual and non-controversial will allow exceptions to the general prohibition against compulsory words.  As noted above, a drug’s list price doesn’t qualify as purely factual for purposes of informing consumers, because consumers rarely pay that price.  Nor does the HHS proposal qualify as non-controversial, for obvious reasons.

Accordingly, a government attempt to force advertisers to state prices that are higher than what almost all consumers actually pay can’t withstand First Amendment scrutiny, and will be struck down when challenged in court.

Finally, the HHS doesn’t even possess authority to impose this proposed mandate.  That authority under Congressional statute instead lies with the Food and Drug Administration (FDA).  Proponents of the HHS mandate assert that the Social Security Act provides a loophole to force this proposal upon the pharmaceutical market, but that too won’t withstand court scrutiny.

For all of these reasons, the HHS proposal to engage in compulsory speech, speech that isn’t even accurate or informative, is a head-scratcher.  Hopefully it will reconsider this ill-advised effort sooner rather than later, and pursue more effective ways of reducing pharmaceutical and healthcare costs.

America’s pharmaceutical innovators lead the world, saving and improving people’s lives on a daily basis.  But relentless efforts to move toward a single-payer system and impose destructive price controls threaten our continuing progress.

Drug maker Biogen recently announced exciting results of a clinical trial for a new drug to treat Alzheimer’s disease. Yet, despite the promise that this could be a breakthrough that gets us closer to a cure, the medical community and families with loved ones suffering from the disease are holding their collective breath.

Why? Because we’ve been down this road before.

Alzheimer’s is one of the most complex and pernicious medical conditions that we face, with no known cure and an immense emotional and economic toll. Worse, the rate of diagnosis is increasing and estimates suggest the cost of the disease has already surpassed $259 billion.  According to one Alzheimer’s Association spokesperson, it will “bankrupt Medicare.” By 2050, the cost of care for Alzheimer’s patients could exceed $1 trillion annually.

That is a crisis medical professionals are rushing to solve, but progress has been slow. An estimated 99.6 percent of Alzheimer’s drug “candidates” (i.e. experimental drugs designed to treat Alzheimer’s) fail.

In 2018 alone, high profile failures in Phase 3 clinical trials from drug makers like Eli Lilly and Merck represent decades of work and hundreds of millions of dollars in research yielding little to no results. Even Biogen’s announcement, as promising as it is, has only a 50 percent chance of gaining FDA approval, according to analysts.

The issue of high drug prices is real, but too often the public doesn’t understand the immense risk – and cost – pharmaceutical companies take on to research and develop new treatments for devastating diseases like Alzheimer’s. While everyone hopes Biogen’s new drug is a success, many drugs – including many recent potential treatments for Alzheimer’s – never make it through the clinical trials to market. What’s worse, the lack of transparency in our health care payment system drives costs up even further.

Drug makers invest hundreds of millions of dollars and more into developing new treatments and cures, with no guarantees their research and development will yield results.  That risk must be protected to ensure the continued motivation to strive for better treatments and new cures.

Efforts to cap prices and leverage government buying power via a single-payer system threaten to curtail research and delay or eliminate future cures. It’s a gamble that the United States cannot make, both for our own health and for future generations.

In an interview with CFIF, Sally Satel, M.D., Resident Scholar at the American Enterprise Institute, discusses how to treat America’s pressing opioid epidemic, mental health policies, and political trends in medicine.

Listen to the interview here.

In an interview with CFIF, Sally Pipes, President and CEO of the Pacific Research Institute, discusses the fate of ObamaCare, why Congress should not delay ObamaCare’s repeal and different options for its replacement.

Listen to the interview here.

In an interview with CFIF, Jim Martin, Chairman of 60 Plus Association, discusses skyrocketing healthcare premiums, ObamaCare’s march toward full government control over our healthcare system, and the issue of physician and nursing shortages.

Listen to the interview here.

In an interview with CFIF, Sally Pipes, President and CEO of the Pacific Research Institute, discusses the latest bad news regarding ObamaCare premiums and options, what the presidential candidates propose we do about ObamaCare, and Representative Warren Davidson’s (R-OH) “Lead by Example Act,” which proposes lawmakers sign up for medical care exclusively through the VA.

Listen to the interview here.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

From broken promises to fewer choices to higher costs to tens of millions still uninsured, ObamaCare has been a disaster.   Its defenders insist that it’s still better than we had before, but Americans disagree:

Americans Prefer Pre-ObamaCare Healthcare Syst

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

In an interview with CFIF, Robert King, Healthcare Correspondent for the Washington Examiner, discusses King v. Burwell, ObamaCare’s impact on small businesses, prescription drugs and government intervention, and whether America is ready for a bioterror attack.

Listen to the interview here.

CFIF’s Renee Giachino discusses how President Obama’s rhetoric regarding ObamaCare and the challenge currently before the Supreme Court to the law’s subsidies is both unseemly and not presidential.

Thomas P. Stossel, M.D., American Enterprise Institute Scholar, discusses his book Pharmaphobia: How the Conflict of Interest Myth Undermines American Medical Innovation, how heavy regulation makes medical innovation difficult and expensive, and how bureaucrats, reporters, politicians, and predatory lawyers have built careers attacking the medical products industry.

Listen to the interview here.