The Medium-Term Impact of Medicare Part D on Pharmaceutical Prices

Mark Duggan and Fiona Scott Morton

American Economic Review, 2011, vol. 101, issue 3, 387-92

Abstract: Medicare Part D began coverage of prescription drugs in 2006. Using data from the first year of the program we found that Part D reduced pharmaceutical prices for Medicare recipients, with these effects driven by enrollees previously without drug coverage. In this paper we extend our analysis through 2009, the fourth year of the program, to investigate whether plans continued to extract price concessions in return for favorable formulary placement, or if consumer inertia or other factors caused prices to bounce back after their initial decline. We find price declines persisted through at least the third year of the program.

Date: 2011
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