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The Perils of State-Sanctioned Private Regulation: A Case Study from the Healthcare Marketplace
By Professor Joanna M. Shepherd, Emory University School of Law (May 23, 2014)

Washington Legal Foundation

In this piece, Professor Joanna M. Shepherd looks at the conflicts of interest inherent in state transfers of regulatory power to self-interested market participants, and uses as a case study  the Mississippi Board of Pharmacy’s regulation of PBMs.

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Challenging Government-Sponsored Private Regulation of Competitors
By Professor Alexander Volokh, Emory University School of Law (May 2014)
Reason Foundation Policy Brief

In this policy brief, Professor Alexander Volokh cautions state legislators and regulators that they need to be aware that recent state and federal court decisions show increasing skepticism of private regulatory delegations where conflicts of interest may exist – such as the Mississippi Board of Pharmacy’s regulation of pharmacy benefit managers.  He says courts might invalidate an entire agency, prevent it from regulating in certain ways, and/or hold individual regulators liable for damages.

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 Letter from Federal Trade Commission (March 7, 2014)

In this letter, the FTC staff warns the Centers for Medicare and Medicaid Services that proposed any willing pharmacy provisions threaten the effectiveness of selective contracting with pharmacies as a tool for lowering Medicare Part D costs.

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Biologic Drugs, Biosimilars, and Barriers to Entry
By Joanna Shepherd, Ph.D., Emory University School of Law

Health Matrix: Journal of Law-Medicine 

Congress has recently created a biosimilars approval pathway that would allow less expensive versions of biologic drugs to reach patients more quickly. However, original biologics manufacturers have sought to extend their monopoly profits by erecting various legal and regulatory barriers to entry. This paper discusses the various barriers and explores their market consequences.

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Report of the Alabama Medicaid Pharmacy Study Commission
Produced by Optumas for Donald E. Williamson, M.D., Chair

Alabama Medicaid Pharmacy Study Commission (December, 2013)

This report by the Alabama Governor’s Medicaid Pharmacy Study Commission concludes that if Alabama were to reform its Medicaid pharmacy program by contracting with a pharmacy benefit manager, the program could save as much as $35 million, or 6% of total pharmacy spending, in just a one-year period.

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The Impact of Preferred Pharmacy Networks on Federal Medicare Part D Costs, 2014-2023
By Stephen J. Kaczmarek, Andrea Sheldon, and David M. Liner of Milliman

Prepared for the Pharmaceutical Care Management Association (October 2013)

This actuarial report by Milliman finds Medicare Part D savings of as much as $9.3 billion over the next ten years from using preferred pharmacy networks.

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Selective Contracting in Prescription Drugs: The Benefits of Pharmacy Networks
By Joanna Shepherd, Ph.D., Emory University School of Law

Minnesota Journal of Law, Science, & Technology (forthcoming)

In the article, which draws on economic theory, prior empirical studies, and data supplied by pharmacy benefit manager Express Scripts, Professor Shepherd finds that “pharmacy networks significantly lower the cost of prescription drugs for drug plans and consumers” while having “almost no effect on most consumers’ access to pharmacies.”

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Is More Information Always Better? Mandatory Disclosure Regulations in the Prescription Drug Market
By Joanna Shepherd, Ph.D.
Emory University School of Law
Cornell Law Review Online, Vol. 99, 2013 (March 1, 2013)

Pharmacy benefit managers (PBMs) save Americans billions of dollars each year by lowering the prices of prescription drugs and the costs of prescription drug coverage. However mandatory disclosure regulations recently enacted in several states and under the Affordable Care Act threaten to disrupt the cost savings PBMs currently produce for consumers. These regulations require PBMs to disclose competitively-sensitive financial information to various participants in the prescription drug market. The regulations foster tacit collusion and reduce PBMs’ ability to negotiate discounts with pharmacies and rebates with drug manufacturers. By disrupting competition in the prescription drug market, mandatory disclosure regulations will ultimately increase the prices that consumers pay for prescription drugs.

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The Fox Guarding the Henhouse: The Regulation of Pharmacy Benefit Managers by a Market Adversary
By Joanna Shepherd, Ph.D.

Emory University School of Law
Northwestern Journal of Law and Social Policy, 2013 (March 1, 2013)

Pharmacy benefit managers (PBMs) save Americans billions of dollars each year by lowering the prices that consumers pay for prescription drugs and health plans pay for drug coverage. However, new regulatory developments in some states threaten to undercut competition in the PBM industry and disrupt the cost-savings PBMs currently generate. The regulatory scheme that was adopted by Mississippi in 2011, and is currently under legislative consideration in several other states, shifts regulatory control of PBMs from the neutral Insurance Commissions to the states’ Boards of Pharmacy. The fundamental problem with this structure is that the Boards of Pharmacy are made up of pharmacists, the direct market adversaries of PBMs.

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