A Welfare Analysis of Copay Coupons in Pharmaceuticals
2014/01/21
研討會日期 : 2014-01-21
時間 : 15:00
主講人 : Mr. Chung-Ying Lee
地點 : Conference Room B110
演講者簡介 : Mr. Chung-Ying Lee will receive his Ph.D. in Economics from Duke University in 2014. His research focuses on Industrial organization, applied econometrics, health economics, marketing, pricing strategy. He is applying for the position of the Institute of Economics, AS right now.
演講摘要 : Branded drug manufacturers have recently started to issue copay coupons as part of their strategy to compete with generics when their branded drugs are coming off patent. To explore the welfare implications of copay coupons, I estimate a model of demand and supply using pharmaceutical data on sales, prices, advertising, and copayments for cholesterol-lowering drugs and perform a counterfactual analysis where a branded manufacturer introduces coupons. The model allows flexible substitution patterns and consumer heterogeneity in price sensitivities and preferences for branded drugs. The counterfactuals quantify the effects of copay coupons for different assumptions about the take-up of coupons and the ability of the branded manufacturer to direct them to the most price-sensitive types of consumers. The results show that the agency problem between insurers and patients gives a branded manufacturer a strong incentive to issue copay coupons. Introducing copay coupons benefits the coupon issuer and consumers but raises insurance payments. In equilibrium, insurer spending can increase by as much as 33% even when just 5% of consumers have a coupon, with social welfare falling significantly.
