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What We RANDomly Did Not Learn: Opioid Elasticities and Underlying Mechanisms

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Abstract

We estimate price elasticities for prescription opioid purchases within the general population, both at the extensive and intensive margins. Such elasticities are key inputs to supply-side policies like the design of pharmaceutical benefit plans and opioid taxes. Exploiting random assignment of individuals to health insurance plans from the RAND Health Insurance Experiment, we estimate an elasticity of -0.19 at the extensive margin, and elasticities ranging from -0.21 to -0.33 at the intensive margin. Our data enable us to explore the underlying mechanisms behind these elasticities. Responses to price changes result from both additional physician visits and higher opioid prescription rates per visit as plan generosity increases. We find no evidence linking responses to the share of unfilled prescriptions.

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  • Cecilia S. Diaz-Campo, M. Antonella Mancino, 2023. "What We RANDomly Did Not Learn: Opioid Elasticities and Underlying Mechanisms," LCERPA Working Papers bm0139, Laurier Centre for Economic Research and Policy Analysis.
    • Handle: RePEc:wlu:lcerpa:bm0139
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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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