EconPapers    
Economics at your fingertips  
 

What happens when the insurer can say no? Assessing prior authorization as a tool to prevent high-risk prescriptions and to lower costs

Marcus Dillender ()

Journal of Public Economics, 2018, vol. 165, issue C, 170-200

Abstract: Insurers are increasingly requiring physicians to obtain prior authorization before prescribing drugs that are costly or have high abuse potential. These prior authorization requirements have the potential to reduce risky prescriptions and to lower prescription drug costs, but little is known about their ability to do either. This study estimates the effect of a prior authorization requirement for certain costly and abuse-prone drugs on prescription drug use and costs for work-related injuries in Texas. The findings indicate that the prior authorization requirement reduces the likelihood that claimants receive non-preferred drugs as well as insurers' spending on non-preferred drugs. While there is some substitution to preferred drugs, I do not find evidence of large increases in spending on preferred drugs. The estimated effects on average total pharmacy spending are imprecise, though there is suggestive evidence that the prior authorization requirement reduces the likelihood that a claim has high prescription drug costs. The results provide strong evidence that the prior authorization requirement drastically reduces the likelihood that patients receive combinations of drugs that have contributed disproportionately to the rise in prescription drug overdoses. Despite the success of prior authorization in lowering spending on non-preferred drugs and in reducing high-risk prescriptions, I find little evidence that prior authorization has disproportionately large effects on the most dangerous prescription drug use and only weak, suggestive evidence that it has larger effects on prescription drug use that likely arises because physicians are not fully informed, suggesting that prior authorization requirements do not necessarily target the riskiest drug use.

Keywords: Prior authorization; Prescription drug abuse; Workers' compensation; Health care spending; Prescribing behavior (search for similar items in EconPapers)
JEL-codes: J28 I13 I18 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272718301312
Full text for ScienceDirect subscribers only

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:eee:pubeco:v:165:y:2018:i:c:p:170-200

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-05-15
Handle: RePEc:eee:pubeco:v:165:y:2018:i:c:p:170-200