The European Commission recently stated that the pharmaceutical industry can be characterized by declining innovation, delay of generic entry, and high prices. As a result, a sector inquiry of the pharmaceutical industry has been opened up to identify the determinants of these trends and, if necessary, to follow through with the appropriate antitrust action. Dr. Röller will outline potential competition concerns and discuss the challenges in assessing these concerns within a robust economic framework. Dr. Bernheim will discuss both economic theory and the growing body of empirical evidence that the Centers for Medicare and Medicaid Services’ (“CMS’s”) policy of basing pharmaceutical payments on manufacturer’s Average Sales Price (“ASP”) could lead to significant unintended consequences, including the likelihood of higher prices. His presentation will emphasize the importance of appropriate economic analysis in light of the complexity of pharmaceutical markets and will highlight recent empirical observations.