Titanic-scale multistate generic pricing antitrust litigation has been underway since December 2016, involving increasingly a myriad of generic drug manufacturers and drugs. Forty-seven states allege a pricing conspiracy wherein twenty defendants participated in a multitude of specific horizontal conspiracies to fix prices and markets for fifteen generic drugs in a manner to injure robust generic competition. However, this litigation may have overshadowed an overlooked but important concern. This article argues that the behind-the-scenes conspiracy between generic manufacturers and so-called pharmacy benefit managers (“PBMs”) may have constituted an integral part of the overarching conspiracy alleged in the litigation. PBMs play a pivotal role as intermediaries in the pharmaceutical supply chain and orchestrate a multitude of inter-generic conspiracies. The pharmaceutical industry well situates PBMs in a dominant position to have exclusive and full access to price information and exert influence over profit-maximizing pricing strategies of generic manufacturers. This fact serves as strong evidence that generic manufacturers locked in the PBM-constrained industrial structure are highly incentivized to buy off PBMs in order to control the overarching pricing conspiracy. PBMs’ role in the pharmaceutical logistical chain allows them to further anticompetitive generic collusion, taking the form of vigorous manipulation of two cost-saving schemes: manufacturer rebates and pharmacy reimbursement. The article thoroughly examines the mechanics of how PBMs specifically manipulate these schemes utilizing the complex pricing system, and further provides circumstantial and economic evidence strongly implicating the generic-PBM conspiracy and pragmatic suggestions for prospective antitrust scrutiny.
Pharmacy Benefit Managers and Generic Pharmaceuticals Pricing Conspiracy: Unveiling Lock-In Mechanisms, Structural Shortcomings and Antitrust Evidence by Kwanghyuk Yoo :: SSRNOctober 19, 2018
Medical Aid In Dying And Telemedicine: Improving Access And Protecting Patients by Konstanin Tretyakov :: SSRNOctober 19, 2018
Medical aid in dying is a form of medical treatment recognized in several states and the District of Columbia and available to adult residents of those states who are competent and suffer from a terminal disease. It is critical to ensure timely access to this form of treatment to qualifying patients. The paper explores the possibility of improving access to medical aid in dying via telemedicine — a method of delivery of health care remotely by means of electronic communication. The paper explores the feasibility of this option from clinical and legal perspectives and also explores several normative issues lying at the intersection of telemedicine and medical aid in dying.
Regulatory Pathways to Promote Treatment for Substance Use Disorder or Other Under-Treated Conditions Using Risk Adjustment by Matthew J. B. Lawrence :: SSRNOctober 19, 2018
This Commentary provides a legal analysis of the extent to which changes proposed by scholars to promote care for substance use disorder or other under-treated illnesses through risk adjustment could be implemented administratively, without legislation, in federal risk adjustment systems: Medicare’s privatized component, Medicare’s pharmaceutical component, and the individual and small group market. As the Commentary explains, federal laws governing risk adjustment provide broad discretion to regulators and can reasonably be interpreted to permit (or in the case of Part C even compel) full and final implementation through the administrative process of almost all of the changes that scholars have proposed.
Partial Rating Area Offering in the ACA Marketplaces: Facts, Theory and Evidence by Hanming Fang, Ami Ko :: SSRNOctober 19, 2018
In the health insurance marketplaces established by the Affordable Care Act (ACA), each state is divided into a set number of geographic “rating areas.” The ACA mandates that an insurer price its health insurance plan uniformly in all counties within the same rating area, conditional on insurees’ age and smoking status. However, the ACA does not require that an insurer sell its plan in all counties in a rating area. Using the federal marketplace data, we quantify the prevalence of a phenomenon, which we refer to as partial rating area offering, where insurers enter some but not all of the counties in a rating area. To understand why insurers selectively enter a subset of the counties in a rating area, we develop a simple model of insurer competition. The model implies that if common county characteristics, such as the county’s risk distribution, market size and provider availability, are the primary drivers for the partial rating area offering phenomenon, then there would be a positive correlation among insurers’ entry decisions. In contrast, if the partial rating area offering phenomenon is driven by market segmentation, then there would be a negative correlation. We develop a novel nonparametric correlation test and apply it to the federal marketplace data. We find strong evidence for a positive correlation of insurers’ entry decisions, suggesting that common cost factors are the main driver for the partial rating area offering phenomenon. To the extent that it is a concern that many counties now have few insurers, our result suggests that it is important to offer insurers subsidies that are tied to county characteristics.
Predictive analytics and “big data” are emerging as important new tools for diagnosing and treating patients. But as data collection becomes more pervasive, and as machine learning and analytical methods become more sophisticated, the companies that traffic in health-related big data will face competitive pressures to make more aggressive claims regarding what their programs can predict. Already, patients, practitioners, and payors are inundated with claims that software programs, “apps,” and other forms of predictive analytics can help solve some of the health care system’s most pressing problems. This article considers the evidence and substantiation that we should require of these claims, focusing on “health” claims, or claims to diagnose, treat, or manage diseases or other medical conditions. The problem is that three very different paradigms might apply, depending on whether we cast predictive analytics as akin to medical products, medical practice, or merely as medical information. Because big data methods are so opaque, its claims may be uniquely difficult to substantiate, requiring a new paradigm. This article offers a new framework that considers intended users and appropriate evidentiary baselines.
Expanding the Use of Provider Orders for Life-Sustaining Treatment for Patients with Advanced Cancer by Thaddeus Mason Pope :: SSRNOctober 19, 2018
Patients with advanced cancer often get more aggressive treatment than they want because too few oncologists elicit their end-of-life treatment preferences. In response to this problem, leading associations, including ASCO and the Institute of Medicine, have called for more advance care planning. Medicare has also recognized the value of advance care planning, expanding reimbursement for the service in 2016.
A key component of advance care planning for some patients is the Provider Orders for Life Sustaining Treatment (POLST) directive, which encourages providers to speak with patients about their end-of-life treatment preferences and creates specific medical orders to be honored during a medical crisis. But POLST remains underutilized by oncologists with their advanced cancer patients. Here, we provide some recommendations on how oncologists should take advantage of POLST to help patients improve their end-of-life care.
Since November 2017, Professor Pope has authored a monthly Law and Ethics in Oncology column for the ASCO Post. This column explores the legal and ethical issues oncologists must be aware of in this era of precision medicine and changing healthcare policy, both to protect patients’ rights and to safeguard against potential legal jeopardy.
The ASCO Post, in partnership with the American Society of Clinical Oncology (ASCO), communicates news of evidence-based multidisciplinary cancer care to a broad audience of 30,000 oncology professionals and ASCO members. Professor Pope authors a monthly Law and Ethics in Oncology column that explores the legal and ethical issues oncologists must be aware of in this era of precision medicine and changing health-care policy, both to protect patients’ rights and to safeguard against potential legal jeopardy.
Informal Bankruptcy: Health Expenditure Shocks and Financial Distress Avoidance by G. Nathan Dong :: SSRNOctober 19, 2018
This article studies the financial decision-making behavior of U.S. families that have difficulties paying for their medical bills and investigate what alternatives they have to avoid filing for formal bankruptcy and what influence their motivation to do so. Using household financial and demographic information from the Health Tracking Household Survey in 2007 and 2010, this article finds that families with younger age members, minority ethnic background, more doctor visits, and without insurance made more diverse and severe choices to finance the payments before resorting to personal bankruptcy. Interestingly, households with better education seek more diverse but easier financing methods, suggesting that financial literacy may play a dual role in undertaking financial planning—strategic default and bankruptcy avoiding.