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In search of a corrected prescription drug Elasticity estimate: a meta-regression approach

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  • Marin C. Gemmill

    (LSE Health, London School of Economics and Political Science, London, UK)

  • Joan Costa-Font
  • Alistair McGuire

Abstract

An understanding of the relationship between cost sharing and drug consumption depends on consistent and unbiased price elasticity estimates. However, there is wide heterogeneity among studies, which constrains the applicability of elasticity estimates for empirical purposes and policy simulation. This paper attempts to provide a corrected measure of the drug price elasticity by employing meta-regression analysis (MRA). The results indicate that the elasticity estimates are significantly different from zero, and the corrected elasticity is −0.209 when the results are made robust to heteroskedasticity and clustering of observations. Elasticity values are higher when the study was published in an economic journal, when the study employed a greater number of observations, and when the study used aggregate data. Elasticity estimates are lower when the institutional setting was a tax-based health insurance system. Copyright © 2007 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 16 (2007)
Issue (Month): 6 ()
Pages: 627-643

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Handle: RePEc:wly:hlthec:v:16:y:2007:i:6:p:627-643

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Leibowitz, Arleen & Manning, Willard G. & Newhouse, Joseph P., 1985. "The demand for prescription drugs as a function of cost-sharing," Social Science & Medicine, Elsevier, Elsevier, vol. 21(10), pages 1063-1069, January.
  2. Stephen Smith & Sheila Watson, 1990. "Modelling the effects of prescription charge rises," Fiscal Studies, Institute for Fiscal Studies, Institute for Fiscal Studies, vol. 11(1), pages 75-91, February.
  3. Paul V. Grootendorst & Mitchell Levine, 2002. "Do Drug Plans Matter? Effects of Drug Plan Eligibility on Drug Use Among the Elderly, Social Assistance Recipients and the General Population," Social and Economic Dimensions of an Aging Population Research Papers, McMaster University 73, McMaster University.
  4. T. D. Stanley & Stephen B. Jarrell, 2005. "Meta-Regression Analysis: A Quantitative Method of Literature Surveys," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 19(3), pages 299-308, 07.
  5. O'Brien, Bernie, 1989. "The effect of patient charges on the utilisation of prescription medicines," Journal of Health Economics, Elsevier, Elsevier, vol. 8(1), pages 109-132, March.
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Cited by:
  1. Hristos Doucouliagos & T.D. Stanley, 2008. "Theory Competition and Selectivity: Are All Economic Facts Greatly Exaggerated?," Economics Series 2008_06, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. Kaiser, Ulrich & Mendez, Susan J. & Rønde, Thomas, 2010. "Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 10-062, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Hristos Doucouliagos & T.D. Stanley, 2008. "Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis," Economics Series 2008_14, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  4. Jaume Puig-Junoy & Pilar Garcia-Gomez & David Casado-Marin, 2011. "Free Medicines thanks to Retirement: Moral Hazard and Hospitalization Offsets in an NHS," Tinbergen Institute Discussion Papers, Tinbergen Institute 11-108/3, Tinbergen Institute.
  5. Arcidiacono, Peter & Ellickson, Paul B. & Landry, Peter & Ridley, David B., 2013. "Pharmaceutical followers," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(5), pages 538-553.
  6. Costa-Font, Joan & McGuire, Alistair & Stanley, Tom, 2013. "Publication selection in health policy research: The winner's curse hypothesis," Health Policy, Elsevier, Elsevier, vol. 109(1), pages 78-87.
  7. T.D. Stanley & Hristos Doucouliagos, 2011. "Meta-Regression Approximations to Reduce Publication Selection Bias," Economics Series 2011_4, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  8. Iván Moreno-Torres & Jaume Puig-Junoy & Josep Raya, 2011. "The impact of repeated cost containment policies on pharmaceutical expenditure: experience in Spain," The European Journal of Health Economics, Springer, Springer, vol. 12(6), pages 563-573, December.
  9. Eric Krassoi Peach & T. Stanley, 2009. "Efficiency Wages, Productivity and Simultaneity: A Meta-Regression Analysis," Journal of Labor Research, Springer, Springer, vol. 30(3), pages 262-268, September.
  10. Sina Henningsen & Rebecca Heuke & Michel Clement, 2011. "Determinants of Advertising Effectiveness: The Development of an International Advertising Elasticity Database and a Meta-Analysis," BuR - Business Research, German Academic Association for Business Research, German Academic Association for Business Research, vol. 4(2), pages 193-239, December.
  11. Christopher J. Longo, 2011. "Encouraging pharmaceutical innovation to meet the needs of both developed and developing countries," International Journal of Development Issues, Emerald Group Publishing, Emerald Group Publishing, vol. 10(1), pages 92-101, April.

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