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The Corner Newsletter, December 12, 2019: White Paper: The Role of Monopoly in America’s Prescription Drug Crisis | White Paper: The Role of Hospitals in America’s Health Care Crisis

Welcome to The Corner. In this issue, we introduce our white paper on The Role of Monopoly in America’s Prescription Drug Crisis. We also introduce our white paper on The Role of Hospitals in America’s Health Care Crisis.

December 12, 2019  |  by Open Markets

White Paper: The Role of Monopoly in America’s Prescription Drug Crisis

Bipartisan reform efforts to combat high drug prices often fail to recognize how pharmaceutical corporations suppress fair market competition through various forms of monopoly. In a newly published white paper by the Open Markets Institute, The Role of Monopoly in America’s Prescription Drug Crisis, we detail how increasing corporate concentration in the pharmaceutical industry, and the monopoly markets for individual drugs created by a deeply flawed and increasingly abused patent and regulatory system, are the root causes of the problem.

Drug manufacturers engage in a variety of anti-competitive practices, such as abusing the patent system, various FDA regulations, filing sham citizen petitions with the FDA, and tactics to eliminate competition. These practices are used to extend and protect monopolies and to stifle competition—and they wind up needlessly costing consumers millions of dollars each year.

These practices ultimately drive up drug prices, decrease innovation, and cause shortages and disruptions of the supply of many key drugs. They also imperil drug safety.

Brand drug manufacturers also stifle competition and gain monopoly profits by offering substantial rebates or discounts to large-scale buyers—but only if the purchasers refuse to buy a competing generic drug that might erode the brand drug’s market dominance.

Many of these problems can be solved or ameliorated through better competition policy, which can involve the application and enforcement of our antitrust laws. Other policy solutions include the forced licensing of patents, cash prizes for innovation, or price regulation, among other recommendations.

In each instance, we are looking for public policies that will reset the terms of competition and the balances of power in drug markets so that they serve the public good. Read our entire report here.

White Paper: The Role of Hospitals in America’s Health Care Crisis

Last week, the Open Markets Institute released a white paper titled The Role of Hospitals in America’s Health Care Crisis. Our paper explains how market concentration in the hospital industry results in higher prices for medical services, the weaknesses of our current polices to roll back harmful mergers, and the paper presents several policy options for remedying these issues.

Policy Director Phillip Longman explained that “hospital consolidation can lead in some instances to economies of scale and better-integrated care. Yet in the absence of coherent policies for managing competition, the real-world results of corporate concentration in health care have been hospital closures, increased prices, and loss of choice for health care consumers.” Ultimately, we argue that hospital consolidation should be a standard part of health policy discussion, particularly if proposals to move to a single-payer system gain steam. Read the full report here.

🔊 ANTI-MONOPOLY RISING:

Athena, a grassroots alliance of more than 40 organizations united in opposition to Amazon’s growing monopoly power, was launched late last month. Co-founded by the Open Markets Institute and others, the launch of Athena is a watershed moment in the larger anti-monopoly movement of our time. This diverse coalition of workers, consumers, small-business people and advocates stand united in the fight for a just economy and a fair democracy in the shadow of Amazon’s immense influence.

In the words of our larger coalition: “We are joining together to stop Amazon’s growing, powerful grip over our society and economy. We’re going to write new rules so that our economy puts people first, our public officials ensure that no corporation is above the law or too big to govern — and that our democracy, finally, represents all of us.”

  • “AOC Celebrates That ‘Amazon is Coming to NYC Anyway’ Without Tax Incentives” (Slate, Daniel Politi): Rep. Alexandria Ocasio-Cortez is “waiting on the haters to apologize” after Amazon said it would open up corporate offices in New York City to house more than 1,500 employees. The announcement from the internet giant came less than a year after it abruptly dropped plans to build a second headquarters in the city, following backlash to some $3 billion in financial incentives that the government had offered to woo the company. Ocasio-Cortez quickly celebrated the announcement in a series of tweets. “Won’t you look at that: Amazon is coming to NYC anyway – *without* requiring the public to finance shady deals, helipad handouts for Jeff Bezos, & corporate giveaways,” Ocasio-Cortez tweeted. “May be the Trump admin should focus more on cutting public assistance to billionaires instead of poor families.”
  • “Warren Takes Aim at Bank Mergers, a Sign of Her Presidential Intentions” (New York Times, Jeanna Smialek): Sen. Elizabeth Warren plans to introduce a bill in the coming weeks that would intensify the scrutiny of bank mergers. This isn’t so much a signal of legislative action to come, but rather a signal of her intentions for the finance industry if she is elected president. The bill, a companion of which will be introduced on Wednesday in the House by Democrat Rep. Jesús “Chuy” García of Illinois, will almost certainly go nowhere in the Republican-controlled Senate. But its argument that the “review process for bank mergers is fundamentally broken” indicates that Warren still has the financial industry in her sights.
  • “France Plans a Revolution to Rein in the Kings of Big Tech” (Wired, Tom Simonite): During a joint press conference in London with President Emmanuel Macron of France this week, President Donald Trump threatened to impose tariffs on French goods, including champagne, in retaliation for a new tax on large tech companies. As he spoke, Macron’s digital affairs minister, Cédric O, was in Washington trying to build support for even stronger actions against Google and other tech giants. “Tech platforms have a footprint in our economies and our democracies that is a huge challenge for public power,” O said during a visit to WIRED’s offices in San Francisco, one stop on a weeklong, cross-country trip that involved meeting lawmakers, regulators, and academics to discuss antitrust tactics.
  • “Telecoms Chiefs Back Overhaul of EU Competition Policy” (Financial Times, Nic Fildes): The telecoms sector has thrown its weight behind the European Commission’s new plan to create industrial champions and overhaul its approach to competition policy. A letter signed by the chief executives of some of Europe’s largest telecoms companies states that they would support the move to provide Europe with an “industrial policy for digital leadership,” which could provide a boost for the struggling sector in its battle with giant U.S. technology companies.
  • “FTC Faces Push to Study Ads Targeting Children” (Wall Street Journal, Ryan Tracy): Pediatricians and consumer advocates are calling on the Federal Trade Commission to investigate practices for collecting online data about children, amid concerns that advertisers might be manipulating children with targeted ads. “Advertisingto children is a lucrative, booming business, and not enough is understood about these new methods of surveilling and monetizing children, or the impact that it has on their privacy and well-being,” according to a letter to the FTC from Thursday.
  • “EU Regulators to Review Rules Defining Companies’ Market Power” (Reuters, Foo Yun Chee): EU regulators will review two-decade-old rules that determine whether companies have the market power to throttle rivals or control prices, to take into account globalization and digitalization, Europe’s antitrust chief Margrethe Vestager said on Monday. “Changes like globalization and digitization mean that many markets work rather differently from the way they did 22 years ago,” Vestager told a Chillin Competition conference. “So the time has come to review the Market Definition Notice.”

📝 WHAT WE’VE BEEN UP TO:

  • Matt Stoller spoke with Business Insider about the growing movement to fight economic inequality and corporate power. Stoller said that an alliance between the left and the right on this issue was not only necessary but very promising. Business Insider also named Matt Stoller’s book, Goliath, one of the best books of 2019 on how to rethink capitalism and improve our economy.
  • Open Markets Institute was featured in Jacobin as a leader in the effort to democratize the internet and confront corporate power. “At least in the United States, the cutting edge of the platform regulation conversation is dominated by liberal antitrust advocates, perhaps best represented by the Open Markets Institute.”
  • Matt Stoller spoke with Fast Company in an interview that covered a wide range of antitrust issues, including big tech, free markets, and the future of our democracy. When asked about taking on big tech with our current antitrust laws, Stoller said, “There are laws that exist that people can use. They just don’t.”
  • Matt Stoller told Fortune about the dangers of Disney’s monopoly power in the entertainment industry.” The new Disney is more a private equity group than studio, collecting brands and using them to bargain aggressively with partners, suppliers and consumers … It is not a corporation that pushes the bounds of artistic and technological possibility, but a corporation that pushes the bounds of legal possibility.”

📈 VITAL STAT:

3,800

The number of bank mergers since 2011 that the Federal Reserve has not challenged, according to a memorandum issued by the House Financial Services Committee.

📚 WHAT WE’RE READING:

  • We Asked Public Universities for Their Professors’ Conflicts of Interest — and Got the Runaround” (ProPublicaAnnie Waldman and David Armstrong): How it is difficult, if not impossible, to obtain conflict of interest disclosures from university professors to determine whether the opinions they assert are biased.
  • “Economists: Bright Stars of Antitrust Analysis or Well-Paid Advocates Who Spin a Good Yarn?” (mlex, Curtis Eichelberger): Detailing the arguments for and against—as well as the consequences of—incorporating economists into antitrust litigation.
  • “The Case for Growth Centers: How to Spread Tech Innovation Across America” (Brookings Institution, Robert D. Atkinson, Mark Muro, and Jacob Whilton): How 90% of U.S. job growth in the “innovation sector” since 2005 was confined to only five of America’s largest cities: Boston, the San Francisco Bay Area, San Jose, Seattle, and San Diego.
  • “Save the .ORG Domain and AlISymbolizes” (The Hill, Marc Rotenberg): How the sale of the company managing the .ORG domain to a private equity firm endangers the current public interest ideals symbolized by the domain.

Written by: Barry Lynn, Phil Longman, and Michael Bluhm
Edited by: Barry Lynn, Phil Longman, Daniel A. Hanley, Krista Brown, Udit Thakur, and Michael Bluhm

Image credit: peterschreiber.media via iStock

 

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In America today, wealth and political power are more concentrated than at any point in our country’s history.

The Open Markets Institute, formerly the Open Markets program at New America, was founded to protect liberty and democracy from these extreme -- and growing -- concentrations of private power.

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