Pricing, Litigation, Enforcement: The 2022 Law & Economics Symposium in Review

“There is a difference between list price on the one hand, which is set by the drug manufacturer, and the net price, which is the amount that’s actually charged to the insurer, [that is,] the list price minus the rebate amounts and other concessions that come off of that list price. That difference between list and net is extremely important, and the net pricing is not always visible.”

“Which is preferable, curing more people and paying $300,000 a person, or paying only $189,000 per person but curing fewer people? And it’s not enough to compare the cost per cured person; we also need a general yardstick that tells us if $300,000 per cure is a good deal. Hence, making it reasonable to cure more people even though the cost per person is higher.”

“We don’t want the price too high, we don’t want to be paying more than the benefits of the drug, [but] on the other hand, we don’t want to be paying too little because then we don’t have good incentives for innovation.”

“How do we foster innovation? [T]here’s nothing wrong with spending a lot of money for drugs, but it would be great if we spent that money in such a way that the best drugs get the best prices, and less-effective drugs get a little bit less. … I think coming back to that notion of saying, ‘What is the value to the system of a product?’ and then rewarding it accordingly also has a beneficial effect upstream to innovators who are thinking about what the next big thing is, and where they should be investing their money.”

“There is consolidation across the entire health care system. PBMs obviously, and wholesalers, but even pharmacy retail chains now are [much more] consolidated. … There is, without a doubt, purchasing power in play in that, [as] the dynamics of the supply chain dictate how net prices play out…, they also dictate how list prices play out, but that these things are intimately linked is an accurate observation.”

“Even though I think there’s some perception that the copay assistance wave may have crested at this point, it is still a very active area for DOJ and a very significant risk area for clients in this space.”
 

“When I think about the Anti-Kickback Statute, we all know that there are no safe harbors for traditional patient support like copay, temporary patient assistance, or reimbursement education – what I think of as the nuts and bolts of a traditional patient support program. And I think the government understands…traditional aspects of the patient support, but I don’t think the government has as strong of an understanding of the high-touch patient support that’s often required in rare or ultra-rare diseases. When it comes to things outside of those nuts and bolts, I do worry a lot and think a lot about how to structure those [programs] in a way that shows our compliant intent to support patients, rather than using them as some sort of inducement to refer, prescribe, and purchase.”

“[One] issue is that many [drug] purchases would have still occurred ‘but for’ any promotional activity. … And promotions often occur at the same time as other events that would affect utilization. The same is true for copay assistance or for price concession matters.”
 

 
“[As a practicing physician,] my general thought is that the most important determinant [in prescribing decisions] is the clinical factors that are involved. What disease does a patient have? What medications does a doctor think are going to work best for [that patient]? What side effects or interactions might that medication have with other drugs they’re on?” 

“The vast majority of False Claims Act cases continue to be driven by qui tam whistleblowers. But what you see in 2020 is a very significant increase [in cases] that were initiated by the DOJ. And then, in 2021, you see, generally speaking, a continuation of that trend. So, in 2020 and ‘21, we’ve seen not only a significant absolute increase in the number of DOJ-filed claims, we also see an increase as a percentage of the overall [number of cases]. And the Department has stated that that jump is a reflection of its increasing use of data analytics.” 

“If there is some other explanation for the outlier status – perhaps the hospital is just better or perhaps it just has a different population or it’s just doing something different but legal – then statistics alone are not adequate to complete a fraud case. And [in US ex rel. Integra Medical Analytics] the Ninth Circuit effectively adopted the same reasoning.”

“Human intervention is still very key, both at the development of the model but also [in analyzing] the results that come out. I think we’re still at a stage where there has to be strong human intervention rather than just relying on the machine learning.”
 

“We’ve seen a massive shift of how care has been delivered inside the home in a remote fashion rather than within a brick-and-mortar setting. There’s also, because of that, big changes in how prescribing patterns have evolved, how prescription adoption has happened – and in terms of seeming adherence, because of the way that pharmaceuticals manufacturers, as well as pharmacies, have adapted the way that they actually get medicines to people. And so, if you looked at that data, it would look very different in the post-COVID world.”

“Compliance programs really have to be bespoke. There’s no one-size-fits-all. But I do think that the company should be thinking about these issues against the backdrop of two related but different questions: What are we expected to do, and what should we do?”

“All you need [in economic loss cases] is a purchaser. You don’t necessarily need to prove causation in the traditional product liability sense of demonstrating that a particular plaintiff suffered a particular physical ill effect. The theory is that the product is less valuable than the price paid due to the undisclosed condition, defect, or impurity.”

“[First,] in health care markets in general, patients rely on agents, physicians in this case, to make decisions on their behalf. … [B]ut in many cases, they’re imperfect agents for their patients. [Second,] drugs are subsidized by insurance companies. And when insurance companies and patients together pay the full price, the full price no longer reflects the economic value to the marginal consumer.”

“Whether a physician prescribes a medication depends not only on several patient factors but the physician’s personal experiences, anecdotes from other patients, peer practices, experts’ opinions. … [Physicians assign] different values to the same drug for different patients and also different values for the same drug for the same patient over time. We don’t observe that level of customization in other markets.”

“When I think about worthlessness as an economist, I think about willingness to pay. … It’s a more complicated concept in the health care sector.”

“If you got what you paid for at the time of sale, the fact that you later regretted the purchase is not necessarily an economic loss. The challenge becomes drawing the line between economic loss at the time of sale and post-sale regret.”

“Patients did get those medications. They took them. They received therapeutic benefit from them. And once the issue [with the drug] was identified, then the industry has a regulatory component that was able to address it.”

“This approach [i.e., that the drug in question has no value] is overly simplistic. It does not account for the realities of the health care decision-making process, both from the physician’s perspective as well as the consumer’s perspective. It is more likely that many consumers utilized a more holistic decision-making process, what we call in academia a compensatory decision-making process, and would still attribute significant positive value to the drug [even] after becoming aware of the new impurities.”

“The entity that would make those determinations [affecting coverage decisions] would be the pharmacy and therapeutics [P&T] committee for the payer, PBM-insurer, [or] one of those third-party plans. When P&T committees look at a new product that’s coming to the market, they really have a couple of decisions they want to make. [One is] from a clinical perspective based on the evidence of the clinical studies: Do we want to cover this drug, yes or no? … You look at what are the therapeutic alternatives. Is this a limited issue with one supplier of the product, perhaps? … All those components come into play to decide what action to take.”

“How much a drug has value to a given patient would in principle depend on [the decisions they make based on their consideration of] efficacy, side effects, and convenience. Physicians and patients in turn make their decisions in the context of guidelines and P&T committee recommendations. It’s a complicated landscape of decision making in health care. And simply asking patients a question [in a survey] of how they would weigh one feature versus another is not realistic.”

“But the thing to keep in mind is [that] the [pharmacy] record is the final result of all those decisions we’ve been talking about that influence what happened. So, it tells you what happened; it doesn’t tell you why it happened. And the why it happened is what’s critical in these cases, in my mind.”