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Pharmaceutical Antitrust: What the Trump Administration Can Do

 |  December 6, 2016

Posted by Social Science Research Network

Pharmaceutical Antitrust: What the Trump Administration Can Do

Michael A. Carrier (Rutgers Law School)

Abstract:          Drug prices are in the news. “Pharma Bro” Martin Shkreli increased the price of Daraprim, a treatment for fatal parasitic infections, by 5000%. Mylan found itself on the hot seat for raising the price of the anaphylaxis-treating EpiPen 15 times in 7 years, resulting in a 400% increase to more than $600. Politicians rail about the harms of high drug prices.

What can the next Administration do? A lot. This article shows how—even without directly regulating price—it can use antitrust law to reduce prices by challenging an array of anticompetitive behavior. It can target settlements by which brand drug firms pay generics to delay entering the market. It can go after “product hopping,” by which a brand firm switches from one version of a drug to another to forestall generic competition. It can target distribution restrictions that brands have instituted to block generics. And it can challenge other conduct in the industry.

In short, antitrust law has a vital role to play. Antitrust is about competition, which lowers prices and increases choice. Consumers in the pharmaceutical industry suffer harms as directly in this setting as anywhere. High drug prices have resulted in patients not being able to take vital medicines or splitting pills in half. To add insult to injury, this anticompetitive behavior typically is not justified based on innovation or patents. The agencies in the next Administration have important tasks ahead of them in targeting conduct in the pharmaceutical industry.

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