【AEW Webinar】Contracting over Rebates: Formulary Design and Pharmaceutical Spending

  • 研討會日期 : 2024-04-11
  • 時間 : 08:30
  • 主講人 : Professor Robin Lee
  • 地點 : Register and join online
  • 演講者簡介 : Professor Robin Lee received his Ph.D. from Harvard University in 2008. He is currently a Professor at Harvard University. His research interests are Industrial Organization, Applied Microeconomic Theory, and Health Economics.
  • 演講摘要 : We investigate how formularies used by pharmacy benefit managers (PBMs) to steer consumer demand can constrain spending by affecting manufacturer rebates for branded drugs. We present a theoretical model of multidimensional contracting in which a PBM offers multiple drug manufacturers a menu of formulary-contingent rebate payments and then selects a formulary. We estimate how formulary placement affects drug demand for statins using data from Princeton University, a large employer that contracts with a single PBM to offer prescription drug coverage to its employees. Using our model and demand estimates, we predict the magnitude of rebates with one preferred and one non-preferred tier; we also examine the impact of changing the number of drug tiers or allowing for complete exclusion. Our predicted magnitudes align with aggregate rebate data, and we predict that allowing a PBM to flexibly place branded drugs on preferred- and non-preferred tiers can substantially increase rebate payments.
  • Working Paper Title : Price Competition Under Information (Dis)Advantage
  • Working Paper Speaker Biography : Professor Hsin-Tien (Tiffany) Tsai received her Ph.D. from University of California, Berkeley in 2019. She is currently an Assistant Professor at National University of Singapore. Her research interests are Industrial Organization, Digital Economy, and Fintech.
  • Working Paper Abstract : We examine the impact of asymmetric information access within a vertically in-tegrated e-commerce platform. Using a daily panel, we identify the presence of information advantage for the platform owner: while both the owner and third-party sellers base pricing on past sales, only the owner leverages competitors' sales. We estimate a price competition model with heterogeneous learning and find that information advantage may be a source of market power, decreasing social welfare compared to symmetric information accesses by either limiting or sharing superior information. Sharing leads to a larger welfare increase by enhancing market efficiencies, benefiting consumers, sellers, and the owner.