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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.

Suggested Citation

  • Marin C. Gemmill & Joan Costa-Font & Alistair McGuire, 2007. "In search of a corrected prescription drug Elasticity estimate: a meta-regression approach," Health Economics, John Wiley & Sons, Ltd., vol. 16(6), pages 627-643.
  • Handle: RePEc:wly:hlthec:v:16:y:2007:i:6:p:627-643
    DOI: 10.1002/hec.1190
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    File URL: http://hdl.handle.net/10.1002/hec.1190
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    References listed on IDEAS

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    1. T. D. Stanley & Stephen B. Jarrell, 2005. "Meta-Regression Analysis: A Quantitative Method of Literature Surveys," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 299-308, July.
    2. Paul 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," Quantitative Studies in Economics and Population Research Reports 372, McMaster University.
    3. Stephen Smith & Sheila Watson, 1990. "Modelling the effects of prescription charge rises," Fiscal Studies, Institute for Fiscal Studies, vol. 11(1), pages 75-91, February.
    4. Leibowitz, Arleen & Manning, Willard G. & Newhouse, Joseph P., 1985. "The demand for prescription drugs as a function of cost-sharing," Social Science & Medicine, Elsevier, vol. 21(10), pages 1063-1069, January.
    5. O'Brien, Bernie, 1989. "The effect of patient charges on the utilisation of prescription medicines," Journal of Health Economics, Elsevier, vol. 8(1), pages 109-132, March.
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    Citations

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    Cited by:

    1. McKellar Michael R. & Frank Matthew & Huskamp Haiden & Chernew Michael E., 2012. "The Value of Patent Expiration," Forum for Health Economics & Policy, De Gruyter, vol. 15(2), pages 1-13, November.
    2. Wang, Chao & Li, Qing & Sweetman, Arthur & Hurley, Jeremiah, 2015. "Mandatory universal drug plan, access to health care and health: Evidence from Canada," Journal of Health Economics, Elsevier, vol. 44(C), pages 80-96.
    3. Yang, Jinqiu & Hong, Yongmiao & Ma, Shuangge, 2016. "Impact of the new health care reform on hospital expenditure in China: A case study from a pilot city," China Economic Review, Elsevier, vol. 39(C), pages 1-14.
    4. Kaiser, Ulrich & Mendez, Susan J. & Rønde, Thomas & Ullrich, Hannes, 2014. "Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark," Journal of Health Economics, Elsevier, vol. 36(C), pages 174-187.
    5. 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;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(6), pages 563-573, December.
    6. Costa-Font, Joan & McGuire, Alistair & Stanley, Tom, 2013. "Publication selection in health policy research: The winner's curse hypothesis," Health Policy, Elsevier, vol. 109(1), pages 78-87.
    7. Eric Krassoi Peach & T. Stanley, 2009. "Efficiency Wages, Productivity and Simultaneity: A Meta-Regression Analysis," Journal of Labor Research, Springer, vol. 30(3), pages 262-268, September.
    8. repec:eee:ijrema:v:25:y:2008:i:4:p:234-246 is not listed on IDEAS
    9. 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, vol. 10(1), pages 92-101, April.
    10. Arcidiacono, Peter & Ellickson, Paul B. & Landry, Peter & Ridley, David B., 2013. "Pharmaceutical followers," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 538-553.
    11. Hristos Doucouliagos & T. D. Stanley, 2009. "Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis," British Journal of Industrial Relations, London School of Economics, vol. 47(2), pages 406-428, June.
    12. Stanley, T. D. & Doucouliagos, Hristos, 2011. "Meta-regression approximations to reduce publication selection bias," Working Papers eco_2011_4, Deakin University, Department of Economics.

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