Competition and Innovation in Health Care Markets and Their Implications for Antitrust Enforcement

01 March 2005
By Dr. Lawrence Wu with former NERA Senior Consultant Dr. Rika Mortimer

Innovation has been the centerpiece of competition in health care. By examining health insurance, hospital services, physician services, and pharmaceuticals, they discuss how technological, financial, and organizational innovation has helped spur competition in health care markets. The authors note that the largely undisputed benefits of many of these innovations give rise to an important antitrust policy issue: how to evaluate the competitive consequences of innovative solutions that are the result of a collaboration among competitors. They explain that when multiple competitors merge or form a partnership or joint venture, it's not easy to isolate and evaluate the tradeoff between collaboration and competition because some of the innovative solutions -- especially those that are valuable to patients -- may lead to higher prices. Situations where it's difficult to determine the cause of the price increase (expensive ventures or improvement in quality of care vs. anticompetitive conduct or reduced competition) expose the challenges that lie ahead for health care antitrust policy. Drs. Wu and Mortimer discuss some of these challenges, and focus on analyses of collaborative efforts among competitors in health care markets.

This article appears in the Antitrust Health Care Chronicle, Volume 18/No. 4, Winter 2005, published by the American Bar Association Section of Antitrust Law. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means, or downloaded or stored in an electronic database or retrieval system, without the express written consent of the American Bar Association.