A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements

Abstract

Physician groups charged with price-fixing are typically prosecuted under civil law rather than criminal law even assuming the per se illegality of such agreements. This paper employs a “law and economics” approach to explain the history and evolution of this legal treatment. It argues that civil enforcement likely reflects a desire to promote efficient risk sharing agreements and/or clinical arrangements that provide benefits to patients — benefits that might be lost or mitigated due to “overdeterrence” should such agreements be regarded as criminal offenses. The paper also discusses application of the rule of reason standard to physician price fixing cases and how this standard may have efficiently evolved over time. Finally, the paper takes a normative approach to consider potential reforms to the antitrust treatment of physicians’ collective negotiations on price or price-related terms.

Keywords: Antitrust, health care, law and econonmics

JEL Classification: L4, K10, L84