Restricted accessResearch articleFirst published online 2017-3
The Prescription Drug Pricing Moment: Using Public Health Analysis to Clarify the Fair Competition Debate on Prescription Drug Pricing and Consumer Welfare
Fair competition law and public health law talk past each other when discussing pharmaceutical pricing and distribution. The former cannot agree on the relevant definition of consumer welfare. The latter does not fully comprehend the highly complex but inherently collective nature of pharmaceutical drug acquisition in the United States. This essay proposes to inject public health discourse into this debate to enrich it, focus it, and render it more accessible to those who must live by its outcome.
S. C.Salop, “Question: What Is the Real and Proper Antitrust Welfare Standard? Answer: The True Consumer Welfare Standard,”Loyola Consumer Law Review22, no. 3 (2010): 336-353, at 336, available at <http://lawecommons.luc.edu/cgi/viewcontent.cgi?article=1061&context=lclr> (last visited January 20, 2017).
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Id., at 336-37.
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See K.Heyer, Welfare Standards and Merger Analysis: Why Not the Best?, Economic Analysis Group Discussion Paper, March 2006, available at <https://www.justice.gov/sites/default/files/atr/legacy/2007/09/28/221880.pdf> (last visited January 20, 2017) (arguing for “a total welfare standard — i.e., a standard that considers a merger's likely effect on all members of society, not simply the consumers of products produced by the merging firms.”).
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It is not every issue that, in one week, focused both congressional concern and focused popular cultural concern. Congressional concern as expressed by the call for Committee hearings on and inquiry into the pricing of certain pharmaceuticals. See A.Edney, “Mylan CEO to be Grilled by Congress Over EpiPen Price Surge,”Bloomberg Politics, September14, 2016, available at <https://www.bloomberg.com/politics/articles/2016-09-14/mylan-ceo-will-appear-before-house-oversight-panel-next-week> (last visited January 20, 2017). Popular cultural concern was expressed by the knowing laugh at the 2016 Emmy Awards broadcast when Jimmy Kimmel, the program's host, noted, while passing out brown bags stuffed with peanut butter and jelly sandwiches, “If you're allergic to peanuts, well, I guess this is goodbye, because we can only afford one EpiPen.” See S. Rense, “The Story Behind Jimmy Kimmel's Sharpest Joke at the Emmys,” Esquire, September 19, 2016, available at <http://www.esquire.com/lifestyle/health/videos/a48703/epipen-joke-emmys-transparent/> (last visited January 20, 2017); see also K. Don, “Jimmy Kimmel's EpiPen Joke at the 2016 Emmys Was Honestly Very Much Appreciated,” Romper, available at <https://www.romper.com/p/jimmy-kimmelsepipen-joke-at-the-2016-emmys-was-honestly-very-much-appreciated-18614> (last visited January 20, 2017) (observing that “[n]ot only was [the EpiPen] joke incredibly well-timed, but it was also well received by the audience.”).
Price discrimination is selling the same good at different prices to different customers. See E. R.Berndt and J. P.Newhouse, “Pricing and Reimbursement in the US Pharmaceutical Markets,” in P. M.Danzon and S.Nicholson, eds., Oxford Handbook of the Economics of the Biopharmaceutical Industry (Oxford University Press, 2012): at 201, 233.
Both Part B pharmaceutical coverage and Part D prescription drug plans encompass Medicare beneficiaries at all income levels.
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Medicare's brief experiment with the Least Costly Alternative (LCA) policy marks its most recent foray into a type of reference pricing, an experiment abruptly terminated by litigation in December 2009. See R. M.Conti and M. B.Rosenthal, “Pharmaceutical Policy Reform — Balancing Affordability with Incentives for Innovation,”New England Journal of Medicine374 (2016): 703-706, at 705; see also Hays v. Leavitt, 583 F. Supp. 2d 62 (D.D.C. 2008), aff'd sub nom. Hays v. Sebelius, 589 F.3d 1279 (D.C. Cir. 2009) (ruling the LCA Policy as inconsistent with the Medicare statute); see also Medicare Payment Advisory Commission, Report to Congress: Medicare and the Health Care Delivery System, MedPac 88 (June 2015), available at <http://www.medpac.gov/docs/default-source/reports/june-2015-report-to-the-congress-medicare-and-the-health-care-delivery-system.pdf?sfvrsn=0> (last visited January 20, 2017) (reporting Congress would need to grant that statutory authority to the Secretary of Health and Human Services in order for LCA to be tried again).
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Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066 (amending Title XVIII of the Social Security Act).
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Patient Protection and Affordable Care Act, 42 U.S.C. § 18001 (2010).
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See A. M.Marciarille, “Go Ask Alice,”Missouri State of Mind (January19, 2013), available at <http://www.marciarille.com/2013/01/go-ask-alice.html> (last visited January 20, 2017) (discussing how Medicare beneficiaries end up in Medicare Part C).
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See Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066 (amending Title XVIII of the Social Security Act).
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See Conti and Rosenthal, supra note 11, at 704.
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M. A.Carrier, N.Levidow, and A. S.Kesselheim, “Using Antitrust Law to Challenge Turing's Daraprim Price Increase,”Berkeley Technology Law Journal31 (2016).
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Id.
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Federal Trade Comm'n v. Cardinal Health, Inc., 12 F.Supp.2d 34, 55 (D.D.C.1998) citing U.S. Dep't. of Justice & Federal Trade Comm'n, Horizontal Merger Guidelines Section 3.0 (1992).
