Stockpiling at the Onset of the COVID-19 Pandemic: An Empirical Analysis of National Prescription Drug Sales and Prices

Minje Park (), Anita L. Carson (), Erin R. Fox () and Rena Conti
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Minje Park: Decision, Risk, and Operations, Columbia Business School, New York, New York 10027
Anita L. Carson: Operations and Technology Management, Questrom School of Business, Boston University, Boston, Massachusetts 02215
Erin R. Fox: Drug Information, Pharmacy Informatics, Safety and Quality, and Support Services, University of Utah Health, Salt Lake City, Utah 84132

Management Science, 2024, vol. 70, issue 10, 6483-6501

Abstract: At the onset of the coronavirus (COVID-19) pandemic, hospitals experienced a demand surge for COVID-19–related medical care while simultaneously struggling to source prescription drugs needed to manage COVID-19 patients. This is worrisome as shortfalls in the supply of essential drugs can negatively impact patient outcomes. The popular press reporting on these challenges suggests that they are caused by supply chain disruptions. However, rigorous research on the relationship between the pandemic and prescription drug supply is limited. To address this gap, we leverage a quasi-experimental design and IQVIA’s National Sales Perspectives™ data from 2018 to 2020. We focus on prescription drugs indicated for the management of COVID-19 patients and a set of control drugs (i.e., drugs not used for COVID-19). We find that in the early phases of the pandemic, hospitals stockpiled prescription drugs indicated for the management of COVID-19, making this behavior an under-recognized cause of the sourcing challenges. The sales volume of drugs indicated for COVID-19 management was concentrated in the first two months of the pandemic, after which sales decreased significantly despite a nationwide increase in COVID-19–related hospitalizations. We investigate another potential cause of stockpiling: expected price increases. Counter to concerns of price gouging, we find little evidence of price inflation for these drugs. An implication for drug manufacturers is that orders due to stockpiling by downstream buyers early on in a pandemic may need to be discounted when predicting future demand. Our results have implications for drug suppliers, hospitals, and policymakers interested in improving medical product supply chain resilience.

Keywords: stockpiling; prescription drugs; drug shortage; price; COVID-19 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:10:p:6483-6501

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