Case Overview, Exempting Physicians and Pharmacists from Antitrust Laws


This document provides background information and summarizes the debate over exempting physicians and pharmacists from antitrust laws. The links to the left will lead you to public documents that we have found.


          Although physicians were not an original target of landmark antitrust legislation (principally the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914), contemporary legal interpretations clearly indicate that they fall within these laws' boundaries. Workers who are employees of HMO's and hospitals (like nurses, clerical staff, and maintenance personnel) are free to join unions, but doctors are considered to be "independent contractors" and may not join together and engage in collective bargaining with the management of such institutions. This puts doctors at a disadvantage as they lose the leverage of collective bargaining to work for higher rates and programmatic changes.

          During the 106th Congress Rep. Tom Campbell (R.-CA) spearheaded a drive for legislation that would give health care professionals, such as doctors, dentists, and pharmacists, a waiver from antitrust law. The move at the federal level paralleled efforts in 17 state legislatures. Campbell's initiative received backing from the American Medical Association, the largest professional association representing doctors, as well as from other professional associations and the AFL-CIO. Standing against this proposal was a coalition of insurance companies, HMO's, and hospital associations.

          This group of organizations, the Antitrust Coalition for Consumer Choice in Health Care, worked tirelessly to try to defeat the legislation. "Campbell's bill gives doctors a free pass to be above the law, to collude and fix prices," said a lobbyist representing an insurance association working with the Coalition. The lobbyists opposing the proposal argued that its enactment would lead to significantly higher health care costs. If doctors and other professionals could use collective bargaining to strike better deals for themselves in terms of insurance reimbursements and other payments, those costs would not be absorbed by industry. Rather, they would simply be passed on to consumers in the form of higher insurance premiums. With health care costs high already and consistently rising, this was a powerful argument.

          Yet the primary argument on behalf of the antitrust waiver was strong as well. HMO's and insurers have cut into the autonomy of individual doctors, forcing them to formally justify certain treatments and referrals. As one congressional staffer working on behalf of the Campbell bill put it, "Doctors are the guardians of quality in health care and need to be able to talk to one another about coverage and other rules." Underlying this approach was the public's growing dissatisfaction with HMO and insurance company rules governing treatment by medical providers.

Republican legislators, who controlled both the House and the Senate during 1999-2000, were divided among themselves. Campbell negotiated a promise of a vote from Speaker of the House Dennis Hastert and when the bill reached the floor it passed easily. Much of the momentum behind the antitrust waiver bill disappeared when Rep. Campbell left Congress after the 106th. Most members of the House preferred to be seen by their constituents as siding with doctors and consumers rather than with HMO's and insurance companies. But House passage masked dissatisfaction with the legislation. In the Senate the legislation went nowhere and no major movement on similar legislation emerged during the 107th Congress.