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1 1 (January 18, 2022)

handle is hein.amenin/aeiaefo0001 and id is 1 raw text is: Do Drgmakrs evene Taget tsv tsr l:-i: i .i.. xic Loic-n F r t e and COnra%;d M)auo : anuary 2022 Ihr i's debate abut whether reuating erIg pices i d icare i;lead .anlatu;rmrs to comnsAe by ncas:n revenues r ' he unre7;mul>d mm imreC. We 01 .o-k? n Oh q ueson oyconsiderIC how n A n*-u'acrer 'r-spodd n a reated set in-- -v C hy lost revenues duto b''7 liOiia cn in the E U(pOOn Nion b_.u. rnahintaiinled y inoy NCl i te un reg ated U.: mr ke o. We show hae, -es.- p ite sha redu cins to net rEvenues in e EU, hr was nvan i ~o~aff setting necroase i L v nwe revenu *ven t igir:akers *i(- *the same 'heoeticai abiLity to rake up losses as Khey WOu)d under Med&icar-speif:C rate regulation These data are consistent with mranufiacturirs rdy using hirc ful market powfei in the US, There is ongoing debate about whether the tederal gove1r nsent shoutd actively regulaie drug pris n the Medicare program and how this might affect the co:mmerEial bAMlh care market, in particular, some argue that regulating preces only itin the Medicare market would k-ad drug manutacrurers to cornpensate for the lost revenue by increasing revenues s termmsi.-ng f-romin the cornImercial nmarket (Ainerican Benefits Council et al. 2o 1 This rev- enuc targe-tirng IhypOthles i posits that dring manu-- tacturers target a certain level of earnings for a prod- ct, so reducing revenues in one rnarkect wouod cacse manufacturers to increase revenues in the remauing munregulated markets. i' oremtially, there is reason to question whether drug manufacturers can successfully recoup lost Medicare revenues sin he commercial market kAJlr- 2021). Drug prices in the commercial mar- ket (and the crit edic-are ma rkzer) stem trorn negotiations beoinween drug manufacturers and pur- chasers (often an insurer, ph.a rnsacy b'nefi ta.- ager, or hospital where the resuting price re'fects mbe mar em power of each. That market power stems from various sources, such as the drug's clinicat efficacy andsr the competitive landscape facing the purchaser or drug manu-acturer, Utilization tevels arc partialiydetermnined through this process and are a f-ncton 01prnce ievels and for- nulary placen n, arnon'g othcr factors. The in tro- oduction oh rate regulation in the Mcdicare progranm would not, at 1.ast direty alter the maries power o either parry in commercial market negotiations. If cdrugmakers could nevertheiess increase revenues n the eommerial market following a reduction in Medicare prices, it would imply that they hold bar- gaining leverage that thev choose to not atilize at present. N '> ~

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