High Prices in the US for Life Saving Drugs: Collective Bargaining Through Tort Law?

Emory Legal Studies Research Paper No. 16-389

Marquette Benefits and Social Welfare Law Review 17.2 (forthcoming)

42 Pages Posted: 24 Dec 2015 Last revised: 27 Jan 2017

See all articles by Paul J. Zwier

Paul J. Zwier

Emory University School of Law

Date Written: December 23, 2015

Abstract

Takeovers designed to take advantage of “underpriced” drugs presents an excellent case study for how US might develop policies for dealing with excesses in the market place. Is it best to “sue the bastard,” and use the courts to investigate these matters on an individual, case by case basis, (or, better, investigate as a class action), or, would it be better for Congress to investigate the situation, and then promulgate regulations designed to remedy the high prices for lifesaving drugs. Or would it be best to use some combination of the two approaches?

I argue that either a cause of action for (IIED) or (NIED) should play a significant role in moderating exorbitant pricing of lifesaving drugs. In addition, I show that for real change to occur in the market lawyers should use class action rules on behalf of all patients who are taking the drug. Most importantly, these cases should seek an injunction, to enjoin the price increase for all patients who are taking the prescription, in order to force a collective bargaining by the patients to bring the cost to a reasonable level. The advantages to using Tort law, in combination with certifying a class for settlement purposes, is that it would provide a forum for collective bargaining between those who take the drug and the drug’s manufacturer that is prohibited from occurring by private insurance companies under current antitrust law and Medicare insurers under health care law. Litigation might best bring about the collective bargaining forces needed to insure fair market pricing for lifesaving drugs by providing the direct bargaining the market needs between patients and the companies.

I also employ the work of Jeb Barnes and Thomas Burke to help understand the advantages of using an adversarial litigation approach to help remedy the problem of exorbitant drug prices for lifesaving drugs over legislative, or bureaucratic remedies. Their analysis will aid in understanding why, if the courts do recognize a tort, and certify a class of all patients who take the particular drug, that the courts should fashion a remedy not only for Medicare patients, but also use its equitable powers to oversee a lowering of prices for all patients prescribed the drug.

Keywords: Valeant, Turing, Drug Price, Increase, Lifesaving Drugs, Torts, IIED, NIED

Suggested Citation

Zwier, Paul J., High Prices in the US for Life Saving Drugs: Collective Bargaining Through Tort Law? (December 23, 2015). Emory Legal Studies Research Paper No. 16-389, Marquette Benefits and Social Welfare Law Review 17.2 (forthcoming), Available at SSRN: https://ssrn.com/abstract=2707734 or http://dx.doi.org/10.2139/ssrn.2707734

Paul J. Zwier (Contact Author)

Emory University School of Law ( email )

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