This article examines the possible constructs behind the announcement that Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. are jointly building a new healthcare entity for their employees. In this article, I provide context by discussing and comparing the healthcare ambitions of the three largest information technology companies before arguing that various forms of hybrid entities will increase their footprint in healthcare data and delivery. The core of this discussion is a thought experiment about the nature of what I term “Prime Health.” That analysis is based initially on observations about Amazon’s existing culture and business model of Amazon. Thereafter I examine both what Prime Health could and should be. I argue that it will likely go beyond the pedestrian model of a very large self-funded group insurance plan; will disintermediate traditional healthcare insurers; and attempt to bring consumers and healthcare providers together into some type of online marketplacean updated, privatized version of managed competition. In the final parts of the article I delve into the regulatory environment that hybrid healthcare generally, and Prime Health in particular, will face. This analysis includes federal device and data protection laws, a few idiosyncratic state laws, and a brief discussion of the problems inherent in the limited regulation of hybrid healthcare entities.
Diagnostic tests are a core component of modern health care practice: they determine a patient’s susceptibility to developing cancer and other disorders; they diagnose biological conditions; they monitor the progress of disease; and they can assess the risk of disease recurrence. Ensuring their innovative growth is therefore an important issue in innovation policy. While legal scholarship addresses much about the relevance of patents and other forms of intellectual property protection for diagnostic methods as a general matter, far less attention has been paid to a distinct class of diagnostic tests that deserves its own innovation policy debate: companion diagnostic tests. This note seeks to draw more attention to the economic challenges facing the companion diagnostics industry. It begins by providing the necessary background to understand what companion diagnostic tests are, and why they are vital to the future of modern healthcare. It then explores the unique underlying incentive structure amongst the key industry stakeholders, revealing how the incentives of these stakeholders are misaligned in ways that impede the industry’s growth. Relying on empirical data from case studies collected in pharmacology and biotechnology business literature, this note ultimately argues that the microeconomics of the companion diagnostics industry present a compelling case for invigorated patent protection of companion diagnostic tests.