Demand for Prescription Drugs: The Effects of Managed Care Pharmacy Benefits
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.
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.:
- Dranove, David, 1989. "Medicaid Drug Formulary Restrictions," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 143-62, April.
- Anderson, Simon P & de Palma, Andre, 1992.
"Multiproduct Firms: A Nested Logit Approach,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 40(3), pages 261-76, September.
- Ellison, S & Cockburn, I & Griliches, A & Hausman, J, 1996.
"Characteristics of Demand for Pharmaceutical Products : an Examination of four Cephalosporins,"
96-24, Massachusetts Institute of Technology (MIT), Department of Economics.
- Sara Ellison Fisher & Iain Cockburn & Zvi Griliches & Jerry Hausman, 1997. "Characteristics of Demand for Pharmaceutical Products: An Examination of Four Cephalosporins," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 426-446, Autumn.
- Judith K. Hellerstein, 1994. "The Demand for Post-Patent Prescription Pharmaceuticals," NBER Working Papers 4981, National Bureau of Economic Research, Inc.
- Moore, William J & Newman, Robert J, 1993. "Drug Formulary Restrictions as a Cost-Containment Policy in Medicaid Programs," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 71-97, April.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwphe:9802002. 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: (EconWPA)
If references are entirely missing, you can add them using this form.