law and health policy

PBZ, a large health insurance plan, sent a new contract to area pharmacies lowering the dispensing fee that it pays pharmacies to dispense prescriptions for its beneficiaries. To make matters, worse, instead of basing the drug reimbursement cost on AWP, the plan changed its reimbursement base to AMP. The other health insurers in the area noticed what PBZ did and decided to do the same thing. Community pharmacies in the area were outraged. The patients of the plans collectively account for 85% of the prescriptions that the pharmacies dispense. Profit margins were minimal before the reimbursement changes, but after the changes the pharmacies saw no way they could make a profit on prescription drugs.

The pharmacy directors of the chain pharmacies in the area engaged in a conference call to discuss what they could do. They felt they had no choice but to refuse to fill prescriptions for any patients of the plans. Each chain pharmacy then rejected the contracts sent by the plans and attached a letter that the fees and reimbursement rates were not profitable. Independent pharmacies followed the lead of the chain pharmacies and also rejected the contracts.

The health plans filed a lawsuit against all the pharmacies for violating the Sherman Antitrust Act. The pharmacies then countersued the health plans for violating the Sherman Antitrust Act.

Discussion Questions:

1. Explain whether the pharmacies may have violated the Sherman Antitrust Act and if so, how.

2. What could the pharmacies have done to address this problem that would not risk violating the Sherman Antitrust Act?

3. Explain whether the plans violated the Sherman Act and if so, how.

4. In your opinion is the Sherman Act fair in this situation? Explain both sides of the issue.

Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.

[order_calculator]