Pricing and Reimbursement in U.S. Pharmaceutical Markets

Ernst R. Berndt and Joseph Newhouse
Additional contact information
Ernst R. Berndt: Massachusetts Institute of Technology

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: In this survey chapter on pricing and reimbursement in U.S. pharmaceutical markets, we first provide background information on important federal legislation, institutional details regarding distribution channel logistics, definitions of alternative price measures, related historical developments, and reasons why price discrimination is highly prevalent among branded pharmaceuticals. We then present a theoretical framework for the pricing of branded pharmaceuticals, without and then in the presence of prescription drug insurance, noting factors affecting the relative impacts of drug insurance on prices and on utilization. With this as background, we summarize major long-term trends in copayments and coinsurance rates for retail and mail order purchases, average percentage discounts off Average Whole Price paid by third party payers to pharmacy benefit managers as well as average dispensing fees, and generic penetration rates. We conclude with a summary of the evidence regarding the impact of the 2006 implementation of the Medicare Part D benefits on pharmaceutical prices and utilization, and comment on very recent developments concerning the entry of large retailers such as Wal-Mart into domains traditionally dominated by large retail chains and the "commoditization" of generic drugs.

JEL-codes: D40 I11 I18 L11 L65 (search for similar items in EconPapers)
Date: 2010-09
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://research.hks.harvard.edu/publications/work ... ?PubId=7414&type=WPN

Related works:
Working Paper: Pricing and Reimbursement in U.S. Pharmaceutical Markets (2010)
Working Paper: Pricing and Reimbursement in U.S. Pharmaceutical Markets (2010)
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:ecl:harjfk:rwp10-039

Access Statistics for this paper

More papers in Working Paper Series from Harvard University, John F. Kennedy School of Government Contact information at EDIRC.
Bibliographic data for series maintained by ().