The Effect of Medicare Part D on Pharmaceutical Prices and Utilization

Mark Duggan and Fiona Scott Morton

American Economic Review, 2010, vol. 100, issue 1, 590-607

Abstract: Medicare Part D began coverage of prescription drugs in 2006. Rather than setting pharmaceutical prices, the government contracted with private insurers to provide drug coverage. Theory suggests that additional insured consumers will raise the optimal price of a branded drug, while the insurer's ability to move demand to substitute treatments may lower prices. We estimate the program's effect on the price and utilization of pharmaceutical treatments. We find that Part D enrollees paid substantially lower prices than while uninsured, and increased their utilization of prescription drugs. We find relative price declines only for drugs with significant therapeutic competition. (L18, L11, L65)

JEL-codes: I18 L11 L65 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/aer.100.1.590
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Citations: View citations in EconPapers (65)

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Working Paper: The Effect of Medicare Part D on Pharmaceutical Prices and Utilization (2008)
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