Competition of multiplatform firms: Implications for the Internet of Things.

The Internet of Things (IoT) technology trend is transforming business and society. This creates a need to understand strategic behavior in the consumer IoT, where firms tend to offer multiple platform devices, and new generations of devices are introduced frequently. We propose a novel analytical model that formalizes the concept of a multiplatform firm that offers a system of platforms, such as a smartphone, and a new platform device, such as a smartwatch, and orchestrates a multiplatform ecosystem. The analysis shows how a platform design decision, like offering a new standalone device, affects consumer choices and market outcomes. We identify two classes of new devices that matter, and show when a new platform device may disrupt the smartphone market. Moreover, we characterize conditions under which it is profitable for a vendor to make its new platform device look and feel more like its smartphone. Overall, we provide insights into how multiplatform firms differ from platform firms. We identify future research opportunities on the economics of consumer IoT and multiplatform ecosystems.

Ensuring the veterinary view cuts through.

We submitted a joint response to the Competition and Markets Authority's (CMA) consultation on its proposed market investigation into the UK veterinary services market for pets in April, following the initial review, which outlined a number of concerns.

Adjusting starting points for initial price offers: the example of ibrutinib.

The Inflation Reduction Act of 2022 (IRA) allows the Medicare program to negotiate drug prices beginning in 2024. Based on the guidance in the statute, CMS has selected specific data items to use to adjust initial price offers for 10 drugs in the decision-making process. Although much of the data are publicly available, some of these data items will need to be collected directly from drug companies. A 2019 US House of Representatives Committee on Oversight and Accountability investigative report collected a wide range of data from manufacturers of 12 high-revenue drugs that show what is available from the drug companies, including development costs, marketing, pricing, competition, and patent status. This article focuses on the data obtained for ibrutinib, an oral medication for treating hematologic malignancies, which is one of the only drugs reviewed by the committee that also has been selected for Medicare price negotiation. We examine data that can be obtained only from the drug manufacturer that the IRA has explicitly identified as being used to determine the price and suggest potential negotiation strategies for CMS in response.

Hospital competition and health outcomes: Evidence from acute myocardial infarction admissions in Germany.

Countries increasingly rely on competition among hospitals to improve health outcomes. However, there is limited empirical evidence on the effect of competition on health outcomes in Germany. We examined the effect of hospital competition on quality of care, which is assessed using health outcomes (risk-adjusted in-hospital and post-hospitalization mortality and cardiac-related readmissions), focusing on acute myocardial infarction (AMI) treatment. We obtained data on all hospital utilizations and mortality of 13.2% of the population from a large statutory health insurer and all AMI admission records from Diagnosis-Related Groups Statistic from 2015-19. We constructed the measures of hospital competition, which mitigates the possibility of endogeneity bias. The relationships between health outcomes and competition measures are estimated using linear probability models. Intense competition was associated with lower quality of care in terms of mortality and cardiac-related readmissions. Patients treated in hospitals facing high competition were 0.9 (1.2) percentage points more likely to die within 90 days (2 years) of admission, and 1.4 (1.6) percentage points more likely to be readmitted within 90 days (2 years) of discharge than patients treated in hospitals facing low competition. Our results indicate that hospital competition does not lead to better health outcomes for AMI patients in Germany. Therefore, additional measures are necessary to achieve quality improvement.

A Competition Perspective on Physician Non-compete Agreements.

Physician non-compete agreements may have significant competitive implications, and effects on both providers and patients, but they are treated variously under the law on a state-by-state basis. Reviewing the relevant law and the economic literature cannot identify with confidence the net effects of such agreements on either physicians or health care delivery with any generality. In addition to identifying future research projects to inform policy, it is argued that the antitrust "rule of reason" provides a useful and established framework with which to evaluate such agreements in specific health care markets and, potentially, to address those agreements most likely to do significant damage to health care competition and consumers.

Patents on Risk Evaluation and Mitigation Strategies for Prescription Drugs and Generic Competition.

This cross-sectional study identifies the prevalence of patents on risk evaluation and mitigation strategies and their association with delaying generic competition.

Scope and Incentives for Risk Selection in Health Insurance Markets With Regulated Competition: A Conceptual Framework and International Comparison.

In health insurance markets with regulated competition, regulators face the challenge of preventing risk selection. This paper provides a framework for analyzing the scope (i.e., potential actions by insurers and consumers) and incentives for risk selection in such markets. Our approach consists of three steps. First, we describe four types of risk selection: (a) selection by consumers in and out of the market, (b) selection by consumers between high- and low-value plans, (c) selection by insurers via plan design, and (d) selection by insurers via other channels such as marketing, customer service, and supplementary insurance. In a second step, we develop a conceptual framework of how regulation and features of health insurance markets affect the scope and incentives for risk selection along these four dimensions. In a third step, we use this framework to compare nine health insurance markets with regulated competition in Australia, Europe, Israel, and the United States.

Do Insurers With Greater Market Power Negotiate Consistently Lower Prices for Hospital Care? Evidence From Hospital Price Transparency Data.

This study examined if greater insurer market power was associated with consistently lower negotiated prices within each hospital for 44 shoppable and emergency procedures, using price transparency data disclosed by 1,506 hospitals in metropolitan areas. We used multi-level fixed effects models to estimate the within-hospital variation in plan-level insurer-negotiated prices (from the largest insurer, the second largest insurer, other major insurers, and nonmajor insurers) and cash-pay prices as a function of insurer market power. For shoppable services, relative to nonmajor insurers, the largest, second largest, and other major insurers negotiated 23%, 16%, and 3% lower prices, respectively, while cash prices were 17% higher. For emergency room visits, while the largest insurers paid 5% less than nonmajor insurers, the second largest and other major insurers did not pay lower prices. Stratified analyses by type of shoppable services found varying magnitudes and patterns of price discounts associated with insurer market power.

Ancillary Product Patents to Extend Biologic Patent Life.

This study examines all patents associated with biologic litigation to understand how manufacturers use ancillary product patents to delay biosimilar market entry.

Access in all areas? A round up of developments in market access and health technology assessment: part 2.

In this latest update, we explore the Inflation Reduction Act (IRA) enacted by the US Congress in August 2022, with the Centers for Medicare and Medicaid Services (CMS) recently releasing the list of the first ten drugs it will negotiate prices on. We also cover the consequences of price controls and rigid value assessment in Germany which have led to the withdrawal of a number of medicines. It will be important to see how the IRA balances cost-saving with holistic value assessment, incentives for innovation and patient access to treatment.

Changes in the Number of Continuation Patents on Drugs Approved by the FDA.

This study assesses the frequency of continuation patents on brand-name drugs approved by the US Food and Drug Administration from 2000 to 2015.

Changes In Net Prices And Spending For Pharmaceuticals After The Introduction Of New Therapeutic Competition, 2011-19.

Previous research has demonstrated that the introduction of a new brand-name pharmaceutical competitor does not lower list prices for existing competitive therapies. However, no study has systematically evaluated the impact of new therapeutic competition on net prices of pharmaceutical products. We identified new therapies approved during the period 2013-17 that were competitors for existing treatments. We used a novel peer-reviewed algorithm to estimate the net prices of existing therapies. We implemented regression models to estimate changes in these net prices after the approval of the new therapeutic competition during the period 2011-19. Across twelve therapeutic classes with new drug entrants in 2013-17, the introduction of new therapeutic competition was associated with a 4.2 percent decrease in annual net price growth. The introduction of new brand-name therapies in twelve therapeutic classes reduced net commercial spending on existing therapies by $10.4 billion-an 18.5 percent reduction in projected spending absent therapeutic competition. Our findings demonstrate that new therapeutic competition allows pharmacy benefit managers to use formulary management to decrease net prices and reduce drug spending, contrary to observed trends in list price increases.

Patents and Regulatory Exclusivities on GLP-1 Receptor Agonists.

Importance: Glucagon-like peptide 1 (GLP-1) receptor agonists were first approved for the treatment of type 2 diabetes in 2005. Demand for these drugs has increased rapidly in recent years, as indications have expanded, but they remain expensive. Objective: To analyze how manufacturers of brand-name GLP-1 receptor agonists have used the patent and regulatory systems to extend periods of market exclusivity. Evidence Review: The annual US Food and Drug Administration's (FDA) Approved Drug Products With Therapeutic Equivalence Evaluations was used to identify GLP-1 receptor agonists approved from 2005 to 2021 and to record patents and nonpatent statutory exclusivities listed for each product. Google Patents was used to extract additional data on patents, including whether each was obtained on the delivery device or another aspect of the product. The primary outcome was the duration of expected protection from generic competition, defined as the time elapsed from FDA approval until expiration of the last-to-expire patent or regulatory exclusivity. Findings: On the 10 GLP-1 receptor agonists included in the cohort, drug manufacturers listed with the FDA a median of 19.5 patents (IQR, 9.0-25.8) per product, including a median of 17 patents (IQR, 8.3-22.8) filed before FDA approval and 1.5 (IQR, 0-2.8) filed after FDA approval. Fifty-four percent of all patents listed on GLP-1 receptor agonists were on the delivery devices rather than active ingredients. Manufacturers augmented patent protection with a median of 2 regulatory exclusivities (IQR, 0-3) obtained at approval and 1 (IQR, 0.3-4.3) added after approval. The median total duration of expected protection after FDA approval, when accounting for both preapproval and postapproval patents and regulatory exclusivities, was 18.3 years (IQR, 16.0-19.4). No generic firm has successfully challenged patents on GLP-1 receptor agonists to gain FDA approval. Conclusions and Relevance: Patent and regulatory reform is needed to ensure timely generic entry of GLP-1 receptor agonists to the market.

Antitrust Order Aimed at Equalizing MCED Field.

The FTC ruled on April 3 that Illumina must divest itself of the cancer diagnostics firm Grail, a decision designed to promote competition in the multi-cancer early detection market by providing equal access to essential DNA sequencing technology.

Insurer Market Power And Hospital Prices In The US.

The extent to which concentration in the health insurance market affects negotiated prices paid to hospitals is of high interest to policy makers. We examined the association between insurer market share and hospital prices, using a new source of data obtained through the federal Hospital Price Transparency initiative. We found that the market-leading insurer in the least competitive (most concentrated) insurance markets pays 15 percent less to hospitals than the market-leading insurer in the most competitive (least concentrated) markets. We also found the price relationship to be more pronounced for for-profit hospitals than for not-for-profit hospitals. Our results invite the question of whether dominant insurers are passing savings on to employers in the form of lower premiums.

Hospital Survival In Rural Markets: Closures, Mergers, And Profitability.

Financial distress among rural hospitals in the US has increased in recent years. Using national hospital data, we investigated how the decline in profitability has affected hospital survival, either independently or with a merger. The answer has direct implications for access to care and competition in rural markets. We assessed the rate of hospital closures and mergers in predominantly rural markets during the period 2010-18, focusing on hospitals that were unprofitable at baseline. A minority of unprofitable hospitals (7 percent) closed. A larger share (17 percent) merged, most commonly with organizations from outside of their local geographic market. Most unprofitable hospitals (77 percent) continued to operate through 2018 without closure or merger. About half of these hospitals returned to profitability. At the market level, 22 percent of markets served by unprofitable hospitals lost a competitor to closure or within-market merger. Out-of-market mergers affected 33 percent of markets with an unprofitable hospital. Overall, our results suggest that rural markets are experiencing meaningful rates of hospital closures and mergers, yet many hospitals have survived despite poor financial performance. Policies targeting access to care will continue to be important. Similar attention will be needed to address the competitive effects of hospital closures and mergers on prices and quality.