The effect of Medicare Part D on pharmaceutical prices and utilization
By: Mark Duggan, Fiona Scott Morton.
Contributors: Scott Morton, Fiona.; National Bureau of Economic Research.
Series: NBER working paper series -- working paper 13917; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 13917.
Publisher: National Bureau of Economic Research
Published: 2008
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "On January 1, 2006, the federal government began providing insurance coverage for Medicare recipients' prescription drug expenditures through a new program known as Medicare Part D.  Rather than setting pharmaceutical prices itself, the government contracted with private insurance plans to provide this coverage.  Enrollment in Part D was voluntary, with each Medicare recipient allowed to choose from one of the private insurers with a contract to offer coverage in her geographic region.  This paper evaluates the effect of this program on the price and utilization of pharmaceutical treatments.  Theoretically, it is ambiguous whether the expansion in insurance coverage would increase or reduce pharmaceutical prices.  Insurance-induced reductions in demand elasticities would predict an increase in pharmaceutical firms' optimal prices.  However, Part D plans could potentially negotiate price discounts through their ability to influence the market share of specific treatments.  Using data on product-specific prices and quantities sold in each year in the U.S., our findings indicate that Part D substantially lowered the average price and increased the total utilization of prescription drugs by Medicare recipients.  Our results further suggest that the magnitude of these average effects varies across drugs as predicted by economic theory"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 6/25/2008.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.