March 14th, 2016

Probably Time for Some AntiTrust Enforcement

Shawn Osborne works for a group of hospitals and is responsible for pharmacy services. His budget is sensitive to large price movements in drugs and small price movements in large numbers of drugs. He has gotten the group of hospitals he works for to put $$$$$ next to expensive drugs (expensive in absolute terms and/or expensive relative to other options for the condition) at the point where a doctor is entering a prescription, because the doctor may have no other pricing feedback. I think that is a perfectly reasonable thing to do, and probably should have happened a while ago. Here is why I think regulation is probably worth thinking about:

"Osborne said he now pays as much attention to news about pharmaceutical mergers and acquisitions each week as he does to academic articles about medicines."

If purchasers are paying attention to M&A to anticipate budget affecting price movements UP, then that would seem to be a significant indicator that the M&A in question is anticompetitive. Our entire antitrust system uses as a metric price paid by end consumer.

Of course, there is an alternative antitrust path: civil suit. Maybe that's the plan? Make the hospitals sue the pharma companies?