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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

Jonathan Klick

University of Pennsylvania Law School; Erasmus School of Law; PERC - Property and Environment Research Center

Joshua D. Wright

George Mason University - Antonin Scalia Law School, Faculty

Date Written: 2015

Abstract

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

Klick, Jonathan and Wright, Joshua D., The Effect of Any Willing Provider and Freedom of Choice Laws on Prescription Drug Expenditures (2015). American Law and Economics Review, Vol. 17, P. 192, 2015. Available at SSRN: https://ssrn.com/abstract=2183279 or http://dx.doi.org/10.2139/ssrn.2183279

Jonathan Klick (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
2157463455 (Phone)

Erasmus School of Law ( email )

3000 DR Rotterdam
Netherlands

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

Joshua D. Wright

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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