REDUCING THE PRICE OF PRESCRIPTION DRUGS: GAG CLAUSE PROHIBITIONS, GOVERNMENT PATENT USE, AND SHOPPING ABROAD

Abstract

The disproportionately high price of pharmaceutical drugs in the United States has garnered significant attention and bipartisan agreement that drug prices are too high, particularly in the last several decades. This dissertation examines three approaches to reducing prescription drug costs. In chapter 1, I examine the effect of a legislative reform that has become popular both at the state and federal levels in the last several years: prohibiting pharmacy benefit managers (PBMs) from including gag clauses in contracts with pharmacies. Specifically, I explore whether prohibiting such contractual terms, which prevent pharmacists from informing customers when the retail price of a prescription drug is less than their copay, reduces out-of-pocket expenditures on prescription drugs. In chapter 2, I consider the viability of systematically using two existing statutory mechanisms for government patent infringement to accelerate generic entry in an effort to reduce prescription drug costs. I examine whether using Bayh-Dole march-in rights and Section 1498 government patent use may offer the government a tool for reducing the price of particularly expensive prescription drugs. And, in chapter 3, I use an experiment to better understand the gap between the portion of Americans struggling to afford their prescriptions and the portion of Americans who purchase from foreign pharmacies online to save money. I employ a vignette study to elicit the discount consumers demand before accepting the risks associated with purchasing prescription drugs online from another country and probe risk beliefs about ordering prescription drugs online from foreign countries.