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Subsidies to “Flatten the Curve”

TOTM Trying to quarantine everyone until a vaccine is available doesn’t seem feasible. In addition, restrictions mainly delay when the epidemic explodes, e.g., see previous post . . .

Trying to quarantine everyone until a vaccine is available doesn’t seem feasible. In addition, restrictions mainly delay when the epidemic explodes, e.g., see previous post on Flattening the Curve. In this paper, we propose subsidies to both individuals and businesses, to better align private incentives with social goals, while leaving it up to individuals and businesses to decide for themselves which risks to take.

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Innovation & the New Economy

There Is No Cure for Government Incompetence

TOTM The pandemic is serious. COVID-19 will overwhelm our hospitals. It might break our entire healthcare system. To keep the number of deaths in the low . . .

The pandemic is serious. COVID-19 will overwhelm our hospitals. It might break our entire healthcare system. To keep the number of deaths in the low hundreds of thousands, a study from Imperial College London finds, we will have to shutter much of our economy for months. Small wonder the markets have lost a third of their value in a relentless three-week plunge. Grievous and cruel will be the struggle to come.

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Antitrust & Consumer Protection

What Does ‘Flattening the Curve’ Mean?

TOTM Policy makers are using the term to describe the effects of social distancing and travel restrictions.  In this post, we use a cellular automata model of infection . . .

Policy makers are using the term to describe the effects of social distancing and travel restrictions.  In this post, we use a cellular automata model of infection to show how they might do this.

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Innovation & the New Economy

Pharmacy Benefit Managers, Rebates, and Drug Prices: Conflicts of Interest in the Market for Prescription Drugs

Scholarship Abstract Pharmacy benefit managers (PBMs) manage the drug benefits for over 95 percent of Americans with prescription drug coverage. However, conflicts of interest inherent in . . .

Abstract

Pharmacy benefit managers (PBMs) manage the drug benefits for over 95 percent of Americans with prescription drug coverage. However, conflicts of interest inherent in the PBM business model create perverse incentives for drug price increases. The most significant conflict of interest arises from manufacturer rebates paid to PBMs. PBMs negotiate rebates from drug manufacturers in exchange for giving the manufacturers’ drugs preferred status on a health plan’s formulary. Because the rebates paid to PBMs are typically a percentage of a drug’s list price, drug makers are pressured to increase list prices in order to satisfy PBMs’ demands for higher rebates. Although a portion of the increasing rebate dollars may eventually find its way to patients in the form of lower co-pays, many patients still suffer from the list prices increases. This Article analyzes various proposals to rein in PBM rebates and asserts that, compared to the other proposals, a point-of-sale rebate system maintains many of the benefits of selective contracting while minimizing incentives to increase drug list prices.

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Antitrust & Consumer Protection

Increased E-Cigarette Regulation Increases Barriers to Health

TOTM The Food and Drug Administration has spoken, and its words have, once again, ruffled many feathers. Coinciding with the deadline for companies to lay out . . .

The Food and Drug Administration has spoken, and its words have, once again, ruffled many feathers. Coinciding with the deadline for companies to lay out their plans to prevent youth access to e-cigarettes, the agency has announced new regulatory strategies that are sure to not only make it more difficult for young people to access e-cigarettes, but for adults who benefit from vaping to access them as well.

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Innovation & the New Economy

Taxing e-cigarettes may do more harm than good

Popular Media To fill an anticipated $876 million budget hole in the 2019-21 biennium, the Oregon Health Authority is pursuing a $300 million increase in taxes on tobacco products, . . .

To fill an anticipated $876 million budget hole in the 2019-21 biennium, the Oregon Health Authority is pursuing a $300 million increase in taxes on tobacco products, including e-cigarettes and other vapor products. The agency has not provided any indication what an e-cigarette tax would look like, which invites the question whether e-cigarettes and other vapor products should be taxed at all and, if so, at what rate?

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Innovation & the New Economy

The economic impact of smoke-free air laws on the restaurant and hospitality industries

TOTM One focus in the analysis of smoke-free air (SFA) laws has been on measuring the impact smoking bans have on the restaurant and hospitality industries. . . .

One focus in the analysis of smoke-free air (SFA) laws has been on measuring the impact smoking bans have on the restaurant and hospitality industries. The overwhelming or “consensus” result of this research is that bans impose no adverse impact on industry revenues and employment levels (Scollo et al., 2003; Scollo and Lal, 2008; Hahn, 2010; CDC Fact Sheet, 2014).

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Applying Harm Reduction to Smoking

TOTM Abstinence approaches work exceedingly well on an individual level but continue to fail when applied to populations. We can see this in several areas: teen . . .

Abstinence approaches work exceedingly well on an individual level but continue to fail when applied to populations. We can see this in several areas: teen pregnancy; continued drug use regardless of severe criminal penalties; and high smoking rates in vulnerable populations, despite targeted efforts to prevent youth and adult uptake.

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Innovation & the New Economy

TESTIMONY, Competition in the Pharmaceutical Supply Chain: The Proposed Merger of CVS Health and Aetna

Written Testimonies & Filings Summary Chairman Marino, Ranking Member Cicilline, and Members of the Com- mittee, thank you for giving me the opportunity to testify before you today. The . . .

Summary

Chairman Marino, Ranking Member Cicilline, and Members of the Com- mittee, thank you for giving me the opportunity to testify before you today.

The overriding point of my testimony is that the proposed CVS Health/Aetna merger presents a creative effort by two of the most well-in- formed and successful industry participants to try something new to reform a troubled system. Absent overwhelming evidence that the merger would create an unacceptable risk of harm, the effort should be welcomed and en- couraged. And, as it happens, I have seen no evidence of even a small risk of harm.

It seems fair to say that the predominant characteristic of the CVS Health/Aetna merger is its prospect of developing, on a larger scale than ever before, innovative approaches to healthcare that could transform our healthcare system. As one analyst noted in an article titled, “Why CVS/Aetna Could Be a Game Changer”:

What CVS seeks to do with this deal is to dramatically accelerate that process, and change the nature of the neighborhood pharmacy. For example, we already know that getting a flu shot at the pharmacy is more convenient than making an appointment with a doctor.

What if an entire array of services was available at the pharmacy? Better yet, what if it would cost less to have those services performed at the pharmacy? The advantage to the provider is clear; send the patients to the pharmacy, and free up the doctors for more pressing needs.

Even this touches on only the tip of the potentially transformative iceberg. The proposed merger has the aim and the potential to demonstrate that it is feasible to provide integrated care with a focus both on both lowering costs for therapeutic treatments, such as prescription drugs, as well as enhancing the effectiveness of preventive care in order to reduce the need for therapeutic treatments in the first place.

In this light, I believe that it is important to view this merger not as a combination tending to concentrate economic power in the existing industry structure, but as a significant step toward a reorganization of the industry itself.

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Antitrust & Consumer Protection