Exclusive: FTC facing increasing criticism and oversight from conservatives

Senate Commerce Committee Republicans are leading a probe into the Federal Trade Commission’s (FTC) “newfound use of flawed and self-serving cost-benefit analyses” in “recent notices of proposed rulemaking (NPRMs) and finalized rules,” a group of Senators said in a letter first obtained by the Washington Reporter. 

The letter follows the agency’s interim report on pharmacy benefit managers (PBMs), which was released last week, and which attracted conservative pushback.

In the letter to FTC Commissioner Lina Khan, Sen. Ted Cruz (R., Texas) and his colleagues pressed Khan on her agency’s rulemaking, which they view as straying from the agency’s core mission; Cruz and his colleagues laid out how new analyses from her agency will raise costs for consumers. 

Cruz, who wrote to her along with Sens. John Thune (R., S.D.), Roger Wicker (R., Miss.), Ted Budd (R., N.C.), Deb Fischer (R., Neb.), and Marsha Blackburn (R., Tenn.), noted in his latest letter that “the FTC had previously described its mission as protecting consumers ‘without unduly burdening legitimate business activity,’ [but] its latest strategic plan omits this crucial caveat.” The Republicans pointed to three recent rulemakings Khan led, which demonstrate to them that “the FTC is no longer concerned with whether newly issued regulations are so cost-prohibitive [that] they cripple free enterprise.”

Republicans flagged the FTC’s Unfair or Deceptive Fees (Junk Fees) Rule, the Combating Auto Retail Scams (CARS) Rule, and the Non-Compete Clause Rule as problematic. In making policies like these, “the Commission’s preliminary regulatory analyses overlooked key factors and failed to justify the respective rulemakings,” Cruz and his colleagues said. The FTC’s CARS rule was dinged by the Wall Street Journal last month for “just assum[ing]” the figures it relies on. “This is what passes for cost-benefit analysis under the shortened procedure the agency awarded itself.”

“The FTC denied industry requests to grant a routine extension to the notice and comment period, which would have allowed more time for stakeholders to submit supplemental analyses,” Senators said of the CARS rule. With the rule banning non-competes, “the FTC argued that the rule would increase workers’ earning by more than a quarter trillion dollars annually based on the results of only two, possibly inapt studies,” the lawmakers added. The FTC also ignored basic economics with its junk fees ruling, for example, how “the rule might reduce price advertising, thereby decreasing consumer information, as companies seek to avoid regulatory risk.”

In response to concerns about Khan’s rulemaking, the lawmakers asked her to provide a series of documents, including information about the change of its mission statement and “all economics reports published by the FTC since January 2021” by July 26. 

The Cruz and Commerce letter follows intense conservative pushback over the FTC’s interim staff report on PBMs released last week. After the FTC’s Democratic commissioners released a report claiming that PBMs “profit at the expense of patients,” conservatives and the Republican members of the Commission condemned the report as both overreach and as a biased product that put ideology above facts. FTC Commissioner Melissa Holyoak said “the report was plagued with process irregularities.” FTC Commissioner Andrew Ferguson pointed out the report relied on over 160 “public comments…submitted anonymously.” Former Sen. Pat Toomey (R., Penn) said that the FTC report relied on comments from industry competitors, while former Secretary of State Mike Pompeo called the report “biased and deeply flawed.” 

The criticism of the FTC’s PBM report extended to the Hill, as a senior Senate Committee staffer told the Reporter: “Relying on shallow evidence and anonymous comments to build a case against PBMs makes the FTC look more like an activist group than a government agency.”

Growing criticism of Khan comes after Khan testified in front of the House’s Energy and Commerce Committee last week, where she was pressed on the FTC’s request for a budget increase to $535 million. Rep. John James (R., Mich.), who told the Reporter that “the federal government has become far too used to accepting mediocrity. I come from a background working in the automotive industry — where we were expected to get more efficient, better, safer, and faster — with less resources — even as things become more complex. The American people expect better of the federal government, and that’s why I am committed to fighting bureaucratic waste.”

Read the full letter HERE.