Rika Onishi Mortimer (Department of Economics, University of California, Berkeley)
Abstract
This paper examines how demand for prescription drugs is influenced by different types of insurance. In order to understand demand characteristics and the competitiveness of pharmaceutical markets, both intermolecular (therapeutic) and intramolecular (generic) substitutions are studied in the antidepressant and beta blocker (anti- hypertensive) markets. Mixed logit and other discrete choice models are applied to national survey and product sales data. The results indicate that demand in managed care sectors is more price elastic than in other sectors. Demand in the self-paid sector is found to be the least price elastic, despite the fact that patients must pay for the entire cost of drugs. The results confirm the effectiveness of managed care incentives in shifting prescription patterns toward less expensive products, and suggest the existence of an agency problem between physicians and patients.
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Paper provided by EconWPA in its series HEW with number
9802002.
Length: Date of creation: 23 Feb 1998 Date of revision: Handle: RePEc:wpa:wuwphe:9802002
Note: 59 pp; PC-Word .doc Contact details of provider: Web page: http://129.3.20.41
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Find related papers by JEL classification: I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
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