As Artificial Intelligence (AI) has disrupted across industry verticals, healthcare is also closely following behind. The World Economic Forum (WEF) states that billions of dollars have been invested in healthcare AI.
However, the question remains whether the investments are being made in the right places. On the flip side, pharmaceutical giants may misuse their AI investments to violate Federal antitrust laws.
These laws prohibit anti-competition conduct and mergers that may deprive American consumers. So, how do pharma companies violate antitrust laws through AI? In this article, we will discuss three ways in which this may happen.
Market Entry Barriers
One of the main purposes for which Federal antitrust laws exist is to promote fair competition and business practices. This helps in removing barriers to entry for new firms. Antitrust laws prevent this by prohibiting actions that suppress competition, preventing cartel formation, and breaking up monopolized firms.
Now, healthcare is a slowly evolving sector where many new small firms do not have the necessary resources to develop AI-powered marketing tools. This can become a significant barrier to entry, thereby leading to the suppression of generic competition.
Speaking of generic competition suppression, something of the like occurred recently with the specialty pharmaceutical company, Indivior. This company specializes in manufacturing and selling prescription drugs to treat substance use disorders and other mental illnesses.
One of its products, Suboxone, which had FDA approval for treating opioid use disorder (OUD) is under legal scrutiny. Primarily, the drug has led to severe oral injuries. According to TorHoerman Law, patients have suffered tooth infections, decay, and even loss.
Another allegation under the Suboxone lawsuit is that Indivior was well aware of the drug’s complications but did not issue any warnings. Not only that, the pharma giant participated in false and aggressive marketing claims. All of this happened through generic competition suppression.
After all, the company currently has a net worth of $1.58 billion. That explains how it can collude data and create market entry barriers. In 2021, Indivior even had to pay a hefty sum of $300 million to put marketing allegations to rest. However, it seems as if every tactic in the book, though used, only ended up backfiring.
Algorithmic Price Discrimination
Any company, whether dealing in products or services, is required to treat all competing customers equally. The Federal Trade Commission states that a seller who charges different prices for the same commodity may be violating the Robinson-Patman Act.
Such a bias gives favored customers an undue advantage that has nothing to do with superiority. There are certain conditions under which price discrimination may be considered lawful.
For instance, a medical device seller can charge higher prices depending on the costs of dealing with different customers. What unethical pharmaceutical companies or medical device manufacturers do is engage in what is called algorithmic price discrimination.
AI can analyze huge volumes of data collected from patient records, online behaviors, and social platforms. The analysis would give a fair idea of each patient’s treatment needs, financial situation, as well as price sensitivity.
Based on this data analysis, the algorithms can be manipulated to adjust prices for specific patients. In other words, a patient who may be in dire need of a certain medication may be charged a higher price due to their perceived willingness to pay.
Likewise, tailored marketing campaigns can be targeted toward patients who may be more receptive to a particular procedure or treatment. Furthermore, AI can even analyze market trends and past patient behavior to understand who may be more likely to choose a treatment even at a higher price.
First, this raises concerns regarding the handling of sensitive patient information. Plus, it’s an unfair and unethical practice that involves charging different prices simply based on health status or demographics.
Search Result Manipulation
There is no doubt that AI has disrupted the world of organic search. Statista shares that around 13 million adults across the US used generative AI as their primary online search tool in 2023.
By 2027, this number is expected to become a whopping 90 million. One of the main reasons for this is how generative AI excels in understanding the context and intent of user queries.
Since the results are often more focused, relevant, and accurate, AI will also reduce website click-throughs in the future. This is perhaps why healthcare companies are trying to leverage this aspect to their advantage.
In other words, some may use AI to manipulate search results. First, let’s talk a bit about the good news. AI-assisted search will make it possible to access much-needed complex medical information in a simplified manner.
However, even this benefit gets diminished when search results are manipulated. AI can manipulate search engine algorithms to highlight the services of a particular healthcare provider.
Making them more prominent than others gives that healthcare provider an unfair advantage. There may be others who are more accessible and even affordable, but patients heavily relying on generative AI will remain in oblivion.
As we saw, violating antitrust laws leads to inflated prices, stifled innovation due to limited competition, and ultimate harm to consumer welfare. Since it is still a common practice within the pharmaceutical industry, it raises the question of how many genuine innovations couldn’t reach the market due to such malpractices.
Perhaps we could have had the cure for cancer by now. Complying with antitrust laws is the need of the hour. This can be done by avoiding price collusion, transparent pricing strategies, limiting market allocation, and establishing internal compliance programs.
