When Discounts Raise Costs: The Effect of Copay Coupons on Generic Utilization / Leemore Dafny, Christopher Ody, Matthew Schmitt.

Format:

Book

Author/Creator:

Dafny, Leemore.

Contributor:

National Bureau of Economic Research.

Ody, Christopher.

Schmitt, Matthew.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22745.

NBER working paper series no. w22745

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

When Discounts Raise Costs

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

Branded pharmaceutical manufacturers frequently offer "copay coupons'" that insulate consumers from cost-sharing, thereby undermining insurers' ability to influence drug utilization. We study the impact of copay coupons on branded drugs first facing generic entry between 2007 and 2010. To overcome endogeneity concerns, we exploit cross-state and cross-consumer variation in coupon legality. We find that coupons increase branded sales by 60+ percent, entirely by reducing the sales of bioequivalent generics. During the five years following generic entry, we estimate that coupons increase total spending by $30 to $120 million per drug, or $700 million to $2.7 billion for our sample alone.

Notes:

Print version record

October 2016.