Drug prices under the medicare drug discount card program

Emin M. Dinlersoz, Ruben Hernandez-Murillo (), Han Li () and Roger Sherman

Review, 2008, issue Nov, pages 643-666

Abstract: In early 2004, the U.S. government initiated the Medicare Drug Discount Card Program (MDDCP), which allowed card subscribers to obtain discounts on prescription drugs. Pharmacy-level prices were posted on the program website weekly with the hope or promoting competition among card sponsors by facilitating consumer access to prices. A large panel of pharmacy-level price data collected from this website indicates that price dispersion across cards persisted throughout the program. Prices declined initially when consumers were choosing cards, but rose later when subscribers were restricted to commit to their card choices. In contrast, contemporaneous prices from online drug retailers, which were unrelated to the program, rose steadily over time, indicating that program prices evolved in a way different from the general evolution of prices outside the program.

Keywords: Drugs; Medical care, Cost of (search for similar items in EconPapers)
Date: 2008
View list of references

Downloads: (external link)
http://research.stlouisfed.org/publications/review/08/11/Dinlersoz.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:fip:fedlrv:y:2008:i:nov:p:643-666:n:v.90no.6

Ordering information: This journal article can be ordered from
http://www.stls.frb. ... h/order/pubform.html

Access Statistics for this article

More articles in Review from Federal Reserve Bank of St. Louis
Contact information at EDIRC.
Series data maintained by Diane Rosenberger ().