How Do Copayment Coupons Affect Branded Drug Prices and Quantities Purchased?

Leemore Dafny, Kate Ho and Edward Kong

American Economic Journal: Economic Policy, 2024, vol. 16, issue 3, 314-46

Abstract: We estimate the causal effects of drug copayment coupons, which reduce consumer cost sharing for branded prescription drugs, on net-of-rebate price and quantities sold. We show that coupon introductions increase the quantity of drugs without generic substitutes sold by 23–25 percent for the commercial segment relative to Medicare Advantage, where coupons are banned. To quantify the resulting equilibrium price effects, we estimate a discrete choice model of demand for multiple sclerosis drugs and simulate a model of drug price negotiations. We estimate that net-of-rebate prices are 8 percent higher due to coupons being offered for most of these drugs.

JEL-codes: G22 I18 L65 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pol.20220355 (application/pdf)
https://doi.org/10.3886/E185842V1 (text/html)
https://www.aeaweb.org/doi/10.1257/pol.20220355.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/pol.20220355.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

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: https://EconPapers.repec.org/RePEc:aea:aejpol:v:16:y:2024:i:3:p:314-46

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/pol.20220355

Access Statistics for this article

American Economic Journal: Economic Policy is currently edited by Matthew Shapiro

More articles in American Economic Journal: Economic Policy from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().