The Effect of Any Willing Provider and Freedom of Choice Laws on Prescription Drug Expenditures
American Law and Economics Review, Vol. 17, P. 192, 2015
22 Pages Posted: 1 Dec 2012 Last revised: 15 Dec 2016
Date Written: 2015
Any Willing Provider and Freedom of Choice laws restrict the ability of managed care entities, including pharmacy benefit managers, to selectively contract with providers. The managed care entities argue this limits their ability to generate cost savings, while proponents of the laws suggest that such selective contracts limit competition, leading to an increase in aggregate costs. We examine the effect of state adoption of such laws on prescription drug expenditures, finding that any willing provider/freedom of choice laws are associated with cost increases of at least 3 percent. These results suggest that these laws are harmful from a spending perspective.
Keywords: managed care, pharmacy benefit managers, spending, selective contracting
JEL Classification: I18, K32, L42
Suggested Citation: Suggested Citation