Preferred Pharmacy Networks and Drug Costs / Amanda Starc, Ashley Swanson.

Format:

Book

Author/Creator:

Starc, Amanda.

Contributor:

National Bureau of Economic Research.

Swanson, Ashley.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24862.

NBER working paper series no. w24862

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

Selective contracting is an increasingly popular tool for reducing health care costs, but these savings must be weighed against consumer surplus losses from restricted access. In both public and private prescription drug insurance plans, issuers utilize preferred pharmacy networks to reduce drug prices. We show that, in the Medicare Part D program, drug plans with more restrictive preferred pharmacy networks, and plans with fewer enrollees who are insensitive to preferred pharmacy discounts on copays, pay lower retail drug prices. We then use estimates of plan and pharmacy demand to estimate the first-order costs and benefits of selective contracting in the presence of enrollees with heterogeneous sensitivity to preferred supplier incentives.

Notes:

Print version record

July 2018.