Excessive pricing in the pharmaceutical industry: adding another string to the bow of EU competition law.

The paper addresses the issue of excessive price abuse under Article 102(a) of the Treaty on the Functioning of the European Union (TFEU), by drawing inspiration from a recent stream of cases (developed first at the national and then at the EU level) involving pharmaceutical companies marketing off-patent drugs. In particular, the two 'most advanced' cases are analysed: Aspen in Italy and Pfizer/Flynn in the United Kingdom. This new-found attention towards exploitative practices in the form of excessive and unfair pricing by dominant undertakings that have traditionally been subject to a cautious antitrust scrutiny seems worth exploring for a number of reasons, as illustrated in the paper. Ultimately, it is argued that this further 'interference' of competition law into the realms of regulation may be actually justified, albeit subject to precise conditions for enforcement, and may pursue policy objectives in the wider context of EU health law.

Sharing, samples, and generics: an antitrust framework.

Rising drug prices are in the news. By increasing price, drug companies have placed vital, even life-saving, medicines out of the reach of consumers. In a recent development, brand firms have prevented generics even from entering the market. The ruse for this strategy involves risk-management programs known as Risk Evaluation and Mitigation Strategies ("REMS"). Pursuant to legislation enacted in 2007, the FDA requires REMS when a drug's risks (such as death or injury) outweigh its rewards. Brands have used this regime, intended to bring drugs to the market, to block generic competition. Regulations such as the federal Hatch-Waxman Act and state substitution laws foster widespread generic competition. But these regimes can only be effectuated through generic entry. And that entry can take place only if a generic can use a brand's sample to show that its product is equivalent. More than 100 generic firms have complained that they have not been able to access needed samples. One study of 40 drugs subject to restricted access programs found that generics' inability to enter cost more than $5 billion a year. Brand firms have contended that antitrust law does not compel them to deal with their competitors and have highlighted concerns related to safety and product liability in justifying their refusals. This Article rebuts these claims. It highlights the importance of samples in the regulatory regime and the FDA's inability to address the issue. It shows how a sharing requirement in this setting is consistent with Supreme Court caselaw. And it demonstrates that the brands' behavior fails the defendant-friendly "no economic sense" test because the conduct literally makes no sense other than by harming generics. Brands' denial of samples offers a textbook case of monopolization. In the universe of pharmaceutical antitrust behavior, other conduct--such as "pay for delay" settlements between brands and generics and "product hopping" from one drug to a slightly modified version--has received the lion's share of attention. But sample denials are overdue for antitrust scrutiny. This Article fills this gap. Given the failure of Congress and the FDA to remedy the issue, antitrust can play a crucial role in ensuring generic access to samples, affirming a linchpin of the pharmaceutical regime.

Assembled Products: The Key to More Effective Competition And Antitrust Oversight in Health Care.

This Article argues that recent calls for antitrust enforcement to protect health insurers from hospital and physician consolidation are incomplete. The principal obstacle to effective competition in health care is not that one or the other party has too much bargaining power, but that they have been buying and selling the wrong things. Vigorous antitrust enforcement will benefit health care consumers only if it accounts for the competitive distortions caused by the sector's long history of government regulation. Because of regulation, what pass for products in health care are typically small process steps and isolated components that can be assigned a billing code, even if they do little to help patients. Instead of further entrenching weakly competitive parties engaged in artificial commerce, antitrust enforcers and regulators should work together to promote the sale of fully assembled products and services that can be warranted to consumers for performance and safety. As better products emerge through innovation and market entry, competition may finally succeed at lowering medical costs, increasing access to treatment, and improving quality of care.

Competition policy in health care markets: navigating the enforcement and policy maze.

US health care is in ferment. Private entities are merging, aligning, and coordinating in a wide array of configurations. At the same time, there is a great deal of policy change. This includes the federal government's Affordable Care Act, as well as actions by Medicare, state legislatures, and state agencies. The health system is built upon markets, which determine how (and how well) goods and services are delivered to consumers, so it is critical that these markets work as well as possible. As the primary federal antitrust enforcement agencies, the Federal Trade Commission and the Department of Justice are charged with ensuring that health care markets operate well, but they are not alone. The functioning of health care markets is also profoundly affected by other parts of the federal government (notably the Centers for Medicare and Medicaid Services) and by state legislation and regulation. In this current period of such dynamic change, it is particularly important for the antitrust agencies to continue and enhance their communication and coordination with other government agencies as well as to maintain vigilant antitrust enforcement and consumer protection in health care markets.

Seeking lower prices where providers are consolidated: an examination of market and policy strategies.

The ongoing consolidation between and among hospitals and physicians tends to raise prices for health care services, which poses increasing challenges for private purchasers and payers. This article examines strategies that these purchasers and payers can pursue to combat provider leverage to increase prices. It also examines opportunities for governments to either support or constrain these strategies. In response to higher prices, payers are developing new approaches to benefit and network design, some of which may be effective in moderating prices and, in some cases, volume. These approaches interact with public policy because regulation can either facilitate or constrain them. Federal and state governments also have opportunities to limit consolidation's effect on prices by developing antitrust policies that better address current market environments and by fostering the development of physician organizations that can increase competition and contract with payers under shared-savings approaches. The success of these private- and public-sector initiatives likely will determine whether governments shift from supporting competition to directly regulating payment rates.

State strategies to avoid antitrust concerns in multipayer medical home initiatives.

Currently, 20 states have had one or more active multipayer medical home initiatives. As more states convene multiple payers and work to align payment policies, concerns regarding antitrust liability will need to be addressed. This issue brief provides a summary of state strategies to navigate antitrust concerns in multipayer medical home initiatives. Information for this brief was obtained from a survey sent to 14 states combined with a scan of state websites. Nine states have policies in place either through legislation or executive order to provide some legal protection for their efforts to displace competition among payers. Out of concern that legislation was not sufficient, policymakers in one state also conducted oversight activities to reduce the risk of antitrust liability. Six of the 14 states surveyed have engaged in multipayer initiatives without formal antitrust protection.

The corporate transformation of medical specialty care: the exemplary case of neonatology.

The key to wealth in health care is the physician, who certifies to third-party payers that health care items and services are necessary for patient care. To compete more effectively for this wealth, physician specialists are organizing their practices into for-profit corporations and employing other physicians. Focusing on neonatology, this article describes the prevailing business model of these for-profit medical groups as controlling employed physicians through restrictive employment contract provisions, e.g., non-compete and mandatory arbitration clauses. With this business model and because of deficiencies in current law, for-profit medical groups eliminate competition from other physician specialists to the detriment of patients and consumers.

Critical issues in hospital antitrust law.

Antitrust litigation involving hospitals is common. This paper describes recent developments and underlying issues in antitrust law with respect to hospital-hospital relations, hospital-physician relations, and hospital-payer relations. A key unanswered question in each of these areas is how government regulation and public purchasing affect competitive markets for hospital services.

Hospital markets and competition: implications for antitrust policy.

Antitrust and competitive issues are intertwined with efforts to control health care costs. Whether hospital competition holds down costs is an issue of much controversy and is the topic of this article. The findings are consistent with the hypothesis that hospitals compete primarily on a nonprice basis. This suggests that a more flexible application of antitrust policy to hospital mergers will reduce cost increases and will improve efficiency. A step in this direction may be necessary if the managed care plans discussed by the Clinton administration create highly concentrated provider networks.

Antitrust, competition, and health care reform.

The goals of health care reform and the antitrust laws are similar: promotion of consumer welfare. Under reform, having large groups of consumers and providers will offer substantial efficiencies in purchasing and providing health care services but also will pose some antitrust risks. Health alliances may have excessive market power. Health plans and provider networks may have the potential to foreclose competition from actual or potential rivals. Mergers and joint ventures between providers will proliferate but may raise similar problems. Explicit exemptions from the antitrust laws-through federal or state legislation-may significantly limit the benefits of competition for consumers. A reformed health care system will not reduce the need for antitrust enforcement.

An empirical investigation of procurement contract structures.

This article presents a model of procurement contracting with asymmetric cost information and investigates whether two of the model's predictions are consistent with actual contracts between hospitals and California's Medicaid program. The article first tests for the presence of a fixed-price payment region where Medicaid's payments are independent of hospitals' actual (but unobservable) production costs and then tests whether the size of the fixed-price region depends upon expectations about hospitals' costs. To conduct these tests, the article must first estimate hospitals' "unobservable" costs attributable to Medicaid patients. The article finds evidence of a fixed-price region but cannot confirm that the size of the fixed-price region depends upon expectations about hospitals' costs.