On Utilization and Stockpiling of Prescription Drugs when Co-payments Increase: Heterogeneity across Types of Drugs
This paper investigates prescription drug utilization changes following an exogenous shift in consumer co-payment caused by a reform in the Danish subsidy scheme for the general public. Two different types of medication are considered – insulin for treatment of the chronic condition diabetes and penicillin for treatment of non-chronic conditions. Using purchasing records for a 20% random sample of the Danish population, I show that increasing co-payments lower the utilization of both drugs. I demonstrate that individuals treated with drugs for chronic conditions react to the policy change by stockpiling on their medications. This has implications for other papers in the literature that use variation in subsidy rates over time to estimate the price elasticity of demand. This is not the case for penicillin however, where price elasticities are estimated to be in the -.18 – -.35 range. Further, I find that the lower part of the income distribution is more price responsive.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Igal Hendel & Aviv Nevo, 2006.
"Measuring the Implications of Sales and Consumer Inventory Behavior,"
Econometric Society, vol. 74(6), pages 1637-1673, November.
- Igal Hendel & Aviv Nevo, 2005. "Measuring the Implications of Sales and Consumer Inventory Behavior," NBER Working Papers 11307, National Bureau of Economic Research, Inc.
- Simonsen, Marianne & Skipper, Lars & Skipper, Niels, 2010.
"Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design,"
10-1, University of Aarhus, Aarhus School of Business, Department of Economics.
- Marianne Simonsen & Lars Skipper & Niels Skipper, 2010. "Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design," Economics Working Papers 2010-03, School of Economics and Management, University of Aarhus.
- Paul Contoyannis & Jeremiah Hurley & Paul Grootendorst & Sung-Hee Jeon & Robyn Tamblyn, 2005. "Estimating the price elasticity of expenditure for prescription drugs in the presence of non-linear price schedules: an illustration from Quebec, Canada," Health Economics, John Wiley & Sons, Ltd., vol. 14(9), pages 909-923.
- Guido Imbens & Thomas Lemieux, 2007.
"Regression Discontinuity Designs: A Guide to Practice,"
NBER Working Papers
13039, National Bureau of Economic Research, Inc.
- Imbens, Guido W. & Lemieux, Thomas, 2008. "Regression discontinuity designs: A guide to practice," Journal of Econometrics, Elsevier, vol. 142(2), pages 615-635, February.
- Guido Imbens & Thomas Lemieux, 2007. "Regression Discontinuity Designs: A Guide to Practice," NBER Technical Working Papers 0337, National Bureau of Economic Research, Inc.
- Mark Duggan & Fiona Scott Morton, 2010.
"The Effect of Medicare Part D on Pharmaceutical Prices and Utilization,"
American Economic Review,
American Economic Association, vol. 100(1), pages 590-607, March.
- Mark Duggan & Fiona Scott Morton, 2008. "The Effect of Medicare Part D on Pharmaceutical Prices and Utilization," NBER Working Papers 13917, National Bureau of Economic Research, Inc.
- Honore, Bo E, 1992. "Trimmed LAD and Least Squares Estimation of Truncated and Censored Regression Models with Fixed Effects," Econometrica, Econometric Society, vol. 60(3), pages 533-65, May.
- Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2010.
"Patient Cost-Sharing and Hospitalization Offsets in the Elderly,"
American Economic Review,
American Economic Association, vol. 100(1), pages 193-213, March.
- Chandra, Amitabh & Gruber, Jonathan & McKnight, Robin, 2009. "Patient Cost-Sharing and Hospitalization Offsets in the Elderly," Scholarly Articles 8058412, Harvard Kennedy School of Government.
- Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
- Keeler, Emmett B & Newhouse, Joseph P & Phelps, C E, 1977. "Deductibles and the Demand for Medical Care Services: The Theory of a Consumer Facing a Variable Price Schedule under Uncertainty," Econometrica, Econometric Society, vol. 45(3), pages 641-55, April.
When requesting a correction, please mention this item's handle: RePEc:aah:aarhec:2010-12. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.