The Structure of Prescription Drug Markets
The Structure of Prescription Drug Markets
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Summary
This page highlights some of the key findings from my research into prescription drug markets, much of it in collaboration with Luca Maini.
The overarching goal of the research is to understand the market structure of drug markets (including patient behavior and strategic behavior by firms), how policy interacts with the structure, and the implications for consumer health, overall spending, and innovation incentives.
The research makes use of claims data from a variety of sources (MEPS, MarketScan, IQVIA), pricing data from SSR Health, insurance coverage data from MMIT, and manually collected data from financial filings and business news.
History-Dependence in Drug Demand
History-Dependence in Drug Demand
Review of Economics and Statistics
Patients stick to drug brands at very high rates, unless newer drugs are significantly better. I show evidence that this impacts entry timing incentives by comparing the price of Priority Review Vouchers to initial sales.
Demand Inertia and the Hidden Impact of Pharmacy Benefit Managers
Demand Inertia and the Hidden Impact of Pharmacy Benefit Managers
Management Science (w/ Luca Maini)
Pharmacy Benefit Managers counteract the upward pricing pressure created by demand inertia. PBMs reduce total spending on drugs by about 28 percent relative to a world with direct pricing and coinsurance. The model also helps explain the declining net prices in the market for Hepatitis C cures.
Profiting from Most-Favored Customer Procurement Rules: Evidence from Medicaid
Profiting from Most-Favored Customer Procurement Rules: Evidence from Medicaid
AEJ Policy (w/ Thomas Hwang and Luca Maini)
We show that a 2010 change to Medicaid reimbursement rules for prescription drugs reduced spending in both Medicaid and non-Medicaid segments (2.5 percent in the latter). Part of this was driven by weakening the most-favored customer rules in Medicaid.
Mergers that Matter: the Impact of M&A Activity in Prescription Drug Markets
Mergers that Matter: the Impact of M&A Activity in Prescription Drug Markets
JPE Micro (w/ Thomas Hwang, Yunjuan Liu, and Luca Maini)
We find that most mergers do not lead to significant price increases. Stealth mergers that combine therapeutic substitutes, which are often executed as the licensing of marketing rights, do lead to large price increases of about 88 percent. Acquisitions that consolidate drugs with different indications leave markets unaffected on average, but are occasionally followed by prices increases when they significantly expand a company's portfolio.
Stocking Under the Influence: Spillovers from Commercial Drug Coverage to Medicare Utilization
Stocking Under the Influence: Spillovers from Commercial Drug Coverage to Medicare Utilization
Major revisions requested, American Economic Review (w/ Emma Dean and Luca Maini)
We show that variation in the commercial insurance coverage of physician-administered drugs affects Medicare utilization, despite Medicare insuring all such drugs. We provide evidence that this is driven by hospital stocking incentives, and build a model to capture the interaction of the insurance coverage game and the facility stocking game.
Other Publications
Other Publications
JAMA (w/ Thomas Hwang, Stacie Dusetzina, Luca Maini, and Aaron Kesselheim)
Health Economics (w/ Matt Higgins and Elena Patel)
Review of Industrial Organization (w/ Thomas Hwang, Jacob Klimek, and Luca Maini)
Journal of General Internal Medicine (w/ Thomas Hwang, Stacie Dusetzina, Luca Maini, and Aaron Kesselheim)
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