The Devil in the Tiers

Prescription drug spending in the USA has soared, fueled by rising drug prices. A critical mechanism for restraining drug prices is the formulary tiering system. Although tiering should reflect the cost of a drug—and reward patients who choose less-expensive drugs—something is seriously amiss. Using Medicare claims data from roughly one million patients between 2010 and 2017, this article finds troubling amounts of distorted tiering and wasted cost. Increasingly, generics are shifted to more expensive—and therefore less accessible—tiers. The percentage of generics on the leastexpensive tier drops from 73% to 28%; the percentage of drugs on inappropriate tiers rises from 47% to 74%. Considering only costs paid by patients and the federal Low-Income Subsidy Program, tier misplacement cumulatively costs society $13.25 billion over the time period. An unruly problem demands a disruptive solution. This article advances the counterintuitive regulatory reform that tiering should be based on a drug’s list price. Yes, list price—that roundly dismissed figure—should become the touchstone. This would deter incentive-distorting rebate schemes while recognizingthat many people already pay list price. It is a remarkably streamlined approach for cutting through a wide swath of perverse incentives and manipulations

Naked Price and Pharmaceutical Trade Secret Overreach

Trade secret has drifted from a quiet backwater doctrine to a pervasive force in intellectual property. As always, the risk of distortion is great when a legal arena is developing and expanding rapidly. Nowhere do the theoretical tensions of trade secret law appear in such stark relief as in the modern pharmaceutical debates, where the heart of the theoretical question involves whether pricing is a proper subject for trade secrecy claims. We aim to bring trade secret into greater harmony with broad concepts that reach across all intellectual property regimes. As with other areas of intellectual property law, trade secret law is not a mere contest of private commercial interests. Rather, it embeds substantial dedication to the public interest, reflecting utilitarian balancing of key societal interests. In this context, we develop the concept of “thin” trade secret, looking to the analogous concepts in other intellectual property regimes. Such approaches embody the recognition that intellectual property rights are not solid monoliths, presenting an impenetrable wall through which no party but the rights holder may pass. Rather, they are brilliantly nimble and subtle systems, deftly threading their way among various societal goals. This Article offers the potential of anchoring trade secret more firmly to its theoretical base, as well as bringing trade secret closer to the family of other intellectual property regimes. Although squabbling, chaotic, and somewhat dispersed, all members of this time-honored family can learn from each other, sharing their battleworn wisdom with the newest, young upstart

Atomistic Antitrust

Antitrust is atomistic: deliberately focused on trees, not forests. It pays attention to the consequences of individual acts alleged to be anticompetitive. That focus is misplaced. Companies and markets don\u27t focus on one particular act to the exclusion of all else. Business strategy emphasizes holistic, integrated planning. And market outcomes aren\u27t determined by a single act, but by the result of multiple acts by multiple parties in the overall context of the structure and characteristics of the market. The atomistic nature of modern antitrust law causes it to miss two important classes of potential competitive harms. First, the focus on individual acts, coupled with the preponderance of the evidence standard for proving a violation, means that antitrust can\u27t effectively deal with what we might call probabilistic competitive harm: multiple acts, any one of which might or might not harm competition. Second, atomistic antitrust tends to miss synergistic competitive harm: acts which are lawful when taken individually but which combine together in an anticompetitive way. Unfortunately, modern antitrust law has strayed too far down the atomistic pathway. Courts and agencies too often take a narrow, transaction-specific focus to challenged conduct. Instead of asking is the overall behavior of this company reducing competition in the market, they focus on a particular merger or challenged monopolistic practice in isolation. Courts and agencies need to move beyond atomistic antitrust and take a more holistic look at the circumstances and effects of an overall pattern of conduct. Our goal in this Article is to set out a framework for integrated antitrust, in which individual actions can be understood not just on their own but also as part of a comprehensive whole. Only by doing so can the legal system both return antitrust to its roots and bring antitrust into the modern context of the business decisions that courts must analyze today

Atomistic Antitrust

Antitrust is atomistic: deliberately focused on trees, not forests. It pays attention to the consequences of individual acts alleged to be anticompetitive. That focus is misplaced. Companies and markets don\u27t focus on one particular act to the exclusion of all else. Business strategy emphasizes holistic, integrated planning. And market outcomes aren\u27t determined by a single act, but by the result of multiple acts by multiple parties in the overall context of the structure and characteristics of the market. The atomistic nature of modern antitrust law causes it to miss two important classes of potential competitive harms. First, the focus on individual acts, coupled with the preponderance of the evidence standard for proving a violation, means that antitrust can\u27t effectively deal with what we might call probabilistic competitive harm: multiple acts, any one of which might or might not harm competition. Second, atomistic antitrust tends to miss synergistic competitive harm: acts which are lawful when taken individually but which combine together in an anticompetitive way. Unfortunately, modern antitrust law has strayed too far down the atomistic pathway. Courts and agencies too often take a narrow, transaction-specific focus to challenged conduct. Instead of asking is the overall behavior of this company reducing competition in the market, they focus on a particular merger or challenged monopolistic practice in isolation. Courts and agencies need to move beyond atomistic antitrust and take a more holistic look at the circumstances and effects of an overall pattern of conduct. Our goal in this Article is to set out a framework for integrated antitrust, in which individual actions can be understood not just on their own but also as part of a comprehensive whole. Only by doing so can the legal system both return antitrust to its roots and bring antitrust into the modern context of the business decisions that courts must analyze today

Rethinking Rights in Biospace

Twenty-five years ago, Federal courts opened the door to the biotechnology revolution by granting patents on genetic inventions. The nature of such inventions, however, increasingly conflicts with the implications of rules created for mechanical products. In particular, across five disparate doctrines, courts are struggling with the question of whether the definition of a biotech invention should include things beyond the state of the art at the time of the invention. Reaching beyond the state of the art may make sense for mechanical inventions, but it is wreaking havoc in doctrines related to biotechnology. A doorknob is a doorknob, regardless of whether it is made of wood or glass. A doorknob has no parts we can’t identify, and there is no hint that the doorknob may be integrating with the door in ways we never dreamed of. Can we really say, however, that an antibody is an antibody, no matter how it works or what materials it is made out of? This article argues that in uncertain arts such as biotechnology, the definition of an invention should be limited to the state of the art at the time of the invention. Granting rights beyond knowledge at the time of the invention projects an enormous shadow across the future and creates untenable results. The temptation to restrain that reach has led to strange doctrinal twists and an unworkable body of law. After twenty-five years of experience, it is time to rethink our view of the proper shape of rights in this realm