ASHEcon hosts health economics sessions and events along with iHEA and HERO at the annual Allied Social Science Associations (ASSA) Conference. ASHEcon, iHEA and HERO organize eight sessions during the three-day conference, in which selected participants report on research in progress or recently completed.  The ASSA conference is held in conjunction with  59 associations in related disciplines over a three-day period. Average full attendance for the conference is over 13,450 attendees.

2022 ASHEcon Session

Antitrust Issues in Pharmaceutical Markets (I1)

Friday, Jan. 7, 2022   3:45 PM – 5:45 PM (EST)
Chair: Kate Bundorf, Duke University


Competition and Collusion in the United States Generic Drug Market

Emily Cuddy, Princeton University


This paper examines the role of competition in the US generic drug market. Long considered one of the rare bargains of the US healthcare system, the generic drug market experienced a series of unprecedented price spikes over the past decade, which have been linked to the collusive conduct of manufacturers in the so-called “largest corporate cartel in US history.” Using unsealed records of the ring’s activity, I examine how collusion—in combination with other contemporaneous features of the market—affected upstream drug prices. I design a model of retail drug procurement, wherein generic manufacturers submit bids to supply national pharmacies with their drugs, and estimate this model using an estimator which accepts highly aggregated data of firms’ winning bids. In doing so, I recover novel estimates of manufacturers’ costs. Counterfactuals indicate that the collusive ring generated over $12 billion in surplus for itself over 18 months and, moreover, that the unprecedented backlog of generic drug applications at the Food and Drug Administration in this period exacerbated the situation. I conclude by discussing the effects of recently proposed pro-competitive policies in view of my findings.

The Effects of Drug Coupons on Branded Pharmaceuticals

Leemore Dafny, Harvard University
Kate Ho, Princeton University
Ed Kong, Harvard University
David Ridley, Duke University


In recent years, drug copayment coupons to reduce consumer cost-sharing at the point of purchase have become nearly ubiquitous for high-priced brand-name prescription drugs. Medicare bans such coupons on the grounds they are kickbacks for utilization; however, their use is common among the commercially insured. We estimate the causal effects of coupons on demand using variation in coupon introductions over time and by comparing enrollees in commercial vs Medicare Advantage plans. Using data on net-of-rebate prices and quantities from a large pharmacy benefits manager, we show that coupon introductions increase demand by 15% for the commercial segment relative to Medicare Advantage but do not differentially impact net-of-rebate prices.

Common Agent or Double Agent? Pharmacy Benefit Managers in the Prescription Drug Market

Rena Conti, Boston University
Brigham Frandsen, Brigham Young University
Michael Powell, Northwestern University
James Rebitzer, Boston University


In the U.S., pharmacy benefit managers (PBMs) manage prescription drug purchases for payers. Firms selling branded pharmaceuticals bid for preferred slots on the PBM’s formulary by offering rebates off of list price. We find that PBMs enhance efficiency, but the gains do not accrue to consumers or drug makers. Our analysis offers insights into otherwise puzzling questions. Why do drug makers pay rebates to PBMs? Why do payers delegate formulary operations to a few large PBMs? Why are list prices so high? Why might PBMs vertically integrate with payers? Our framework also offers insights into proposals for market reform.

Consolidation in Prescription Drug Markets: Impact on Pricing and Access

Josh Feng, University of Utah
Thomas Hwang, Harvard University
Yunjuan Liu, University of North Carolina-Chapel Hill
Luca Maini, University of North Carolina-Chapel Hill


Despite widespread interest in both mergers and drug markets, very few studies have attempted to study consolidation in this setting, partly because of the lack of reliable data on effective net prices, and because keeping track of the company that owns the marketing rights to a specific drug is complicated. In this paper, we address these issues by constructing a novel dataset of pharmaceutical M&A activity, which we combine with a panel of net sales and formulary status for a set of approximately 1,000 patent-protected drugs between 2007 and 2020. We use a simple event-study design with heterogeneous treatment timing to estimate the reduced-form impact of an acquisition. Our results suggest that drugs involved in acquisitions experience a significant increase in both list and net price, and a decline in units sold. We also find a heterogeneous effect on formulary status. Acquisitions that involve drugs in the same therapeutic class result in worse formulary coverage, while the opposite is true for acquisitions that do not involve such drugs.

Zack Cooper, Yale University
David Ridley, Duke University
Alexander Olssen, University of Pennsylvania
Kate Ho, Princeton University
JEL Classifications
I1 – Health