The Future of the Pharmaceutical Industry: Beyond Government-Granted Monopolies.

Just as tariffs lead to economic distortions and provide incentives for corruption, so do patent monopolies on prescription drugs, except the impact is often an order of magnitude larger.

How Should the World Pay for a Coronavirus Disease (COVID-19) Vaccine?

The potential health and economic value of a vaccine for coronavirus disease (COVID-19) is self-evident given nearly 2 million deaths, "collateral" loss of life as other conditions go untreated, and massive economic damage. Results from the first licensed products are very encouraging; however, there are important reasons why we will likely need second and third generation vaccines. Dedicated incentives and funding focused explicitly on nurturing and advancing competing second and third generation vaccines are essential. This article proposes a collaborative, market-based financing mechanism for the world to incentivize and pay for the development of, and provide equitable access to, second and third generation COVID-19 vaccines. Specifically, we propose consideration of a Benefit-Based Advance Market Commitment (BBAMC). The BBAMC uses health technology assessment to determine value-based prices to guarantee overall market revenues, not revenue for any specific product or company. The poorest countries would not pay a value-based price but a discounted "tail-price." Innovators must agree to supply them at this tail price or to facilitate technology transfer to local licensees at low or zero cost to enable them to supply at this price. We expect these purchases to be paid for in full or large part by global donors. The BBAMC therefore sets prices in relation to value, protects intellectual property rights, encourages competition, and ensures all populations get access to vaccines, subject to agreed priority allocation rules.

Certificate of need and the cost of competition in home healthcare markets.

We used 2010-16 Medicare Cost Reports for 10,737 freestanding home health agencies (HHAs) to examine the impact of home health (HH) and nursing home (NH) certificate-of-need (CON) laws on HHA caseload, total and per-patient variable costs. After adjusting for other HHA characteristics, total costs were higher in states with only HH CON laws ($2,975,698), only NH CON laws ($1,768,097), and both types of laws ($3,511,277), compared with no CON laws ($1,538,536). Higher costs were driven by caseloads, as CON reduced per-patient costs. Additional research is needed to distinguish whether this is due to skimping on quality vs. economies of scale.

Generic Drugs in the United States: Policies to Address Pricing and Competition.

The cost of prescription drugs in the United States continues to be a source of concern for patients, caregivers, and policymakers. Drug prices typically decline rapidly once generic drugs receive US Food and Drug Administration (FDA) approval and enter the market, but the past decade has witnessed rising costs and shortages of generic drugs. We describe the strategies used by brand-name manufacturers to undermine generic competition and the reasons underlying the price increases of off-patent drugs, some of which continue to lack any competition from generic versions, and others that have increased in price despite having generic versions. We discuss the FDA's role in addressing drug prices and promoting competition, including recent agency policies to modify its process of reviewing generic drug applications and to prioritize applications for off-patent drugs with few competitors. We also examine proposed policy solutions and research areas that could help address the price increases of off-patent drugs.

Addressing the Lack of Competition in Generic Drugs to Improve Healthcare Quality and Safety.

A lack of access to critical drugs in the USA, either due to exorbitant prices or shortages, has become a troubling norm that threatens the quality and safety of healthcare. In 2017, there were shortages of 146 commonly used drugs including electrolytes, chemotherapy, cardiovascular, and antibiotic agents. For example, there currently exists a shortage in intravenous fluids and injectable opioids (both in chronic short supply for years) that has been respectively ascribed to disruptions in pharmaceutical manufacturing by Hurricane Maria and manufacturing delays. These explanations, however, mask a more fundamental and avoidable cause: a lack of healthy competition in the generic drug market which is likely contributing to price hikes and shortages. By understanding this underlying cause, we hope to illuminate a pathway from our current state of complacency, where drug price hikes and shortages are routine, to a future state of effective action, where patients have reliable access to vital drugs. This article outlines a roadmap to influence incentives, regulations, new drug development, and ultimately stakeholder (i.e., patients, providers, and drug makers) behavior to enhance competition, with the ultimate aim of improving the quality and safety of healthcare for our patients.

Analysis of Medicine Prices in New Zealand and 16 European Countries.

OBJECTIVE: To compare prices of medicines, both originators and generics, in New Zealand and 16 European countries. METHODS: Ex-factory price data as of December 2012 from New Zealand and 16 European countries were compared for a basket of 14 medicines, most of which were at least partially funded by the state in the 17 countries. Five medicines had, at least in some countries, generic versions on the market whose prices were also analyzed. Medicine price data for the 16 European countries were provided by the Pharma Price Information service. New Zealand medicine prices were retrieved from the New Zealand Pharmaceutical Schedule. Unit prices converted into euro were compared at the ex-factory price level. RESULTS: For the 14 medicines surveyed, considerable price differences at the ex-factory price level were identified. Within the European countries, prices in Greece, Portugal, the United Kingdom, and Spain ranked at the lower end, whereas prices in Switzerland, Germany, Denmark, and Sweden were at the upper end. The results for New Zealand compared with Europe were variable. New Zealand prices were found in the lowest quartile for five medicines and in the highest quartile for seven other products. Price differences between the originator products and generic versions ranged from 0% to 90% depending on the medicine and the country. CONCLUSIONS: Medicine prices varied considerably between European countries and New Zealand as well as among the European countries. These differences are likely to result from national pricing and reimbursement policies.

Incentives and models of governance.

This short commentary on Oliver's review of incentives relates that review to four models of governance: Trust and Altruism (T&A), Choice and Competition (C&C), Naming and Shaming (N&S) and Targets and Terror (T&T).

Economic factors converge: force hospitals to review pricing strategies.

The US hospital service price structures are complex and tend to be significantly higher than the actual cost to provide the service. Health care consumers have been given more authority to drive health care decisions. Transparency in health care is forcing hospitals to critically review and substantiate service prices. It is vital that US hospitals review their pricing strategies in order to continue as strong leaders in the health care market.

The second market failure phenomenon in safety-net health systems: the case of a municipal academic medical center from 1980 to 2000.

The specific aim of this analysis is to demonstrate how the trade-off between efficiency and equity policy approaches affects the ability of at-risk children to access quality health care services at the King/Drew Medical Center of Los Angeles County from 1980 to 2000. The concept of a second market phenomenon is used as a framework to illustrate how efficiency-seeking behaviors of federal, state, and local government actors affected government intervention efforts initiated to remedy health care access hardships created by market failure in low-income communities. A second market failure occurs when government failure results from the reintroduction of market protocols in an environment where the market had originally failed to facilitate the distribution of basic goods and services. The review suggest that financial austerity at the Los Angeles County Department of Health Services in the context of federal, state, and local government policies that emphasized allocative efficiencies, compromised equity values by undermining access to quality pediatric services at the King/Drew Medical Center which was a municipal academic medical center.

Effect of market competition on hospital performance for heart failure.

OBJECTIVES: To investigate whether market competition is a potential driver of hospital performance on the key evidence-based Joint Commission heart-failure (HF) quality indicators of angiotensin-converting enzyme inhibitor/angiotensin receptor blocker prescribed, left ventricular function assessment, smoking-cessation counseling, and discharge instructions. STUDY DESIGN: Retrospective multivariate analysis. METHODS: Hospital performance data for HF was obtained from The Joint Commission's ORYX program from 2003 to 2006. The performance data were linked with hospital characteristics from the American Hospital Association Annual Survey and area-level sociodemographic information from the Area Resource File. Healthcare markets were defined as hospital referral regions (HRRs) and market competition intensity was defined by the Herfindahl-Hirschman Index. Hospital-level and HRR-level ordinary least squares fixed effects regression models were used to estimate the relationship between market competition and performance. RESULTS: A paired comparison indicated that there was a significant change in the mean hospital-level performance over time on all of the HF quality indicators. From the multivariate analyses, hospitals in the least competitive markets (Quintile 5) performed slightly better (2.9%) than the most competitive markets (Quintile 1) for left ventricular function assessment (P <.01). At the HRR level, however, the least competitive markets (Quintile 5) performed moderately worse (5.1%) on the discharge-instructions quality indicator compared with the most competitive markets (Quintile 1) (P = .05). CONCLUSIONS: Market competition intensity was associated with only small differences in hospital performance. The level of market competitiveness may produce only marginal incremental benefits to inpatient HF care.

Cooperation and competition: balanced scorecard and hospital privatization.

PURPOSE: In 2000 the Skåne Region (a public authority) and a private contractor made a five-year agreement for the provision of both in-patient care and out-patient medical services to about 30,000 inhabitants in the south-east part of the region. The Skåne Region is the main provider of health care to about one million inhabitants in the south of Sweden and is responsible for all health care (private and public), including ten hospitals. This paper seeks to answer the question of how the Skåne Region can control and cooperate with a private contractor, entering into competition with the public health care providers in the region. DESIGN/METHODOLOGY/APPROACH: This is a longitudinal study conducted between 2001-2006. It is based on 28 taped interviews with employees responsible for the contracting process, participating observations and comprehensive secondary material. The study presents experiences made by the contractor and the public authority on how to work out and follow-up assignments within the health care sector regarding patient interest, public interest and professional medical interest. FINDINGS: Measurement within the frames of the balanced scorecard (BSC) made it possible to control both volumes and health care quality delivered by the private competing contractor. The political purchaser claims that the Skåne Region has established a cost-effective and successful control system based on trust and measurement. ORIGINALITY/VALUE: This paper reports on a control system, between public purchaser and a private provider within health care, that focuses on and follow-up not only health care production but also health care quality.

[Competition in healthcare--political intentions]. / Wettbewerb im Gesundheitswesen--politische Intentionen.

Over the last 20 years strategies introducing regulated competition have gradually been implemented in the corporatistically structured German healthcare system. In particular, this applies to the structure of health insurance organisation where the corporatively organised allocation system has deliberately been transformed to ensure health insurance choice. Accordingly, the laws governing membership, health insurance premiums and health benefits have been adapted and new rules for public finance including a risk structure compensation scheme encompassing the different kinds of health insurances have been established. The options for competition arising in the area of health service provision do not only affect the health insurance companies themselves, but also the relations to the providers of healthcare as well as their relationship with each other. This holds especially true of the role and function of the (regional) physicians' associations. The relation between collective agreements and individual contracts is still unclear. With the further development of strategies introducing regulated competition the possibilities and limitations of competition will have to be explored and many details--such as, for example, the implementation of the responsibility for ensuring the provision of healthcare services--need to be resolved.

Legitimacy and status groups in financial markets.

Economic sociologists have argued that financial markets should be analysed as uncertainty-processing social networks and intermediary groups. Networks and intermediaries alone cannot confer legitimacy upon financial actors and transactions. Status groups are a solution to this problem. They emphasize reputation, honour and good social behaviour as stabilizers of collective action, as means of social control and as indicators of legitimacy. I examine here the emergence and evolution of status groups of brokers in London, New York and Paris, and show how emphasis on honour was used to legitimize financial transactions. I argue that financial markets should be conceived as networks, intermediary and status groups. In global, automated financial markets status groups like securities analysts are gaining in prominence.

Creating a fair and competitive market place.

The prevailing imbalance in the buyer-seller relationship is threatening access of innovative medical technologies to patients. Proposed steps to remedy the situation are outlined here.