In my last few posts, I’ve been discussing Kamakahi v. ASRM, (N.D. Cal, filed April 12, 2011) a federal antitrust class action seeking damages and an injunction in connection with the American Society for Reproductive Medicine’s guidelines for compensating oocyte donors. So far, I’ve discussed how the oocyte donor compensation guidelines arose, how they are enforced, how the ASRM determined what is reasonable egg donor compensation (all here), and the problems with the ASRM guidelines under antitrust law (here and here).
Today, I’d like to examine what, to many people, is one of the more interesting questions raised by the case: what do ASRM, SART, and/or individual industry collaborators gain by the egg donor compensation guidelines? In other words, classifying the guidelines as a per se Sherman Act violation, as I have argued they should be, dispenses with the need for elaborate court inquiries into collaborator intent, anticompetitive effects, and other issues. Yet this question, though inessential to an antitrust inquiry, is keenly interesting, because the answer is not readily obvious.
What do ASRM, SART, or individual fertility centers gain from the oocyte donor compensation guidelines?
I see at least two potential industry benefits to the ASRM-SART pricing scheme, one involving profits and one involving politics.
As an initial matter, the ASRM-SART oocyte-donor compensation guidelines may depress the price of some eggs used in fertility treatments, depending on the effectiveness of those guidelines. Such price suppression would entail real costs to both consumers of fertility services, in the form of higher prices and less consumer choice, and to oocyte providers, in the form of lost compensation.
Infertile couples pay large sums to fertility clinics for the bundle of goods and services (including, in many cases, a human egg) that will result in the creation of an embryo for implantation. Unless the demand for fertility treatments is completely price insensitive, fertility clinics have the same incentive to contain the price of oocytes (a necessary input into some reproductive services) as any other buyer.
Though Kamakahi, a class action on behalf of egg donors, is a case about supplier harm, it should be emphasized that monopsony markets do not benefit consumers and create a deadweight efficiency loss (as do monopoly markets). Consequently, today it is well established that horizontal purchase agreements present just as much anticompetitive danger as do horizontal selling agreements.
Reliable egg donor compensation data is hard to come by: most of the numbers are either self-reported or rely on advertisements on websites and in college newspapers. For reasons that I discuss here and here, the first source may understate average prices, while the latter may overstate them. Nonetheless, there are reasons to believe that egg donors raise at least a colorable claim of price suppression, which pre-trial discovery could illuminate.
First, surveys of fertility clinics and donor agencies listed with SART report average compensation rates per donation cycle of $4217 and $5200, respectively, roughly in accord with the ASRM guidelines. Second, even studies relying solely on advertising data, which report higher amounts, find some evidence consistent with the influence of price caps. Third, the complaint discloses that a survey of 375 websites of SART-member clinics found that, of those that mentioned the price of donor services, all of them were at or under $10,000. Fourth, some fertility centers explicitly reference their adherence to the ASRM-SART price caps. Says the website of defendant Pacific Fertility Center, as quoted in the complaint, “because of [its] continued efforts to practice medicine within guidelines set forth by ASRM and SART, egg donors participating in our program will NOT be paid above $10,000 per cycle.” Fifth, and finally, recent sperm donor compensation data -- the same analogy employed by ASRM in 2000 to determine levels of “reasonable” egg donor compensation –suggests that egg and sperm donors receive a roughly equal average hourly compensation of between $75 and $93 for time spent in a medical setting. This is despite the fact that—because egg donation requires hormone therapy, whereas sperm donation does not—egg donors face pain, discomfort, and health risks not faced by sperm donors, and these risks and side effects extend beyond the time spent in a medical setting. It is reasonable to suppose that egg donors would demand and—under normal market conditions—receive, additional compensation due to these factors.
None of this conclusively proves that egg donor compensation is successfully suppressed by the ASRM guidelines and enforcement efforts – as noted, the available data is sketchy and ultimately begs the question of what price human eggs would command in a market free of such restraints. But, as previously discussed, price suppression is not a necessary element of a per se case and, in any event, the discovery, dialogue, and, ultimately, trial, should there be one, in Kamakahi should shed light on some of these questions.
If the ASRM- SART agreement is not successfully controlling human egg prices (or even if it is), then what other purpose might it serve? ASRM, SART, and SART-member clinics, doctors, and affiliated egg donor agencies spend time, effort, and money creating (at a minimum) the appearance of cartel enforcement. Yet, cartels are notoriously difficult to sustain. Why exert such effort, if not in the pursuit of above-market profits?
The most plausible alternative scenario is a desire to avoid industry controversy, including controversy related to egg donor compensation. Negative public attitudes toward fertility treatments threaten to prompt into action state and federal lawmakers that, to date, have been largely content to rely on industry self-regulation of the fertility market. It is possible that industry attempts to control egg donor compensation are prompted, at least in part, by a desire to provide the appearance that the industry is addressing issues of public concern and controversy, forestalling the need for state intervention.
Profits, Politics, or Both?
In conclusion, ASRM and the fertility industry can’t have it both ways. Either their “ethical” guidelines on oocyte donor compensation are a farce that do not effectively control egg donor compensation and that, instead, exist primarily to fend off more coercive state or federal regulation (fertility industry self-regulation is, naturally, unique in this respect). Or the guidelines effectively reduce egg donor compensation below the levels that would operate in a market free of such restraints.
Or they could be doing both. But it seems to me that ASRM can’t have it both ways: the guidelines can’t both be an example of effective self-regulation and yet fail to suppress oocyte donor compensation rates. So, it should be interesting to see the defense strategy – which poison will they pick?
If I, and you, patient readers, have the energy for one more post on this topic, I’ll be back to discuss one thing that is not a potential effect of the oocyte donor compensation guidelines: the protection of oocyte donors.
Prior related posts: