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Who Pays for Drug Quality?


  • Jie Chen

    (Department of Political Science, Economics, and Philosophy, College of Staten Island/City University of New York, 2800 Victory Blvd, Room 2N 229, Staten Island, NY 10314, USA.)

  • John A Rizzo

    (Department of Economics and Department of Preventive Medicine, Stony Brook University, Stony Brook, NY 11794, USA.)


This study examines how pharmaceutical costs for higher quality drugs are shared between insurers and consumers. Who bears these costs has important implications for patient access to better drugs, and for differences in access to higher quality pharmaceuticals. We investigate these issues using data from two large drug product classes: non-steroidal anti-inflammatory drugs (NSAIDs) and antidepressants. We find that insurers shift the drug costs associated with higher quality onto consumers for antidepressants but share in the costs of higher quality for NSAIDs. This suggests that patients’ cost burden, hence access, to higher quality drugs may vary across drug product classes.

Suggested Citation

  • Jie Chen & John A Rizzo, 2010. "Who Pays for Drug Quality?," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 36(2), pages 239-254, Spring.
  • Handle: RePEc:pal:easeco:v:36:y:2010:i:2:p:239-254

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    Cited by:

    1. Fossett, Sarah J. & Wunnava, Phanindra V., 2017. "Active Ingredients: Exploring the Key Factors Affecting the Rising Cost of Developing New Drugs," IZA Discussion Papers 10817, Institute for the Study of Labor (IZA).

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