California Prop 61: Which Tony Soprano Bargaining Agent Do You Want?
6 Pages Posted: 17 Oct 2016
Date Written: October 16, 2016
Abstract
Summary: A YES vote is a vote for an honest, but a narrow-minded Tony Soprano style of bargaining. A NO vote is for a dishonest, but open-minded Tony Soprano style bargaining.
California Proposition 61 -- a.k.a. The Drug Price Initiative -- forces managers of government employee prescription drug plans to get more rebates from drug manufacturers. YES ads feature Bernie Sanders and his anti-big business mantra. NO ads feature Veterans lamenting the possibility that this measure will increase their prescription drug costs.
No one has analyzed this proposition starting with the idea that there are two sides to any deal. You have to ask the question: Rebates in return for what?
You have to start with bargaining styles to understand the problem Proposition 61 seeks to fix. Lowering prescription drug prices is all about changing the bargaining style of plan managers.
Keywords: Pharmacy Benefit Managers, PBMs, Bargaining Theory, drug rebates, pharmaceutical rebates, VA formulary, PBM formulary
JEL Classification: C78, D43, I13, I11, I1, L13
Suggested Citation: Suggested Citation