How does it do this? Through the Medicaid Drug Rebate Program. Medicaid.gov explains: The Medicaid Drug Rebate Program is a partnership between CMS, State Medicaid Agencies, and participating drug manufacturers that helps to offset the Federal and State costs of most outpatient prescription drugs dispensed to Medicaid patients. Approximately 600 drug manufacturers currently participate in [...]
Read the rest of this entry »Drugs in Emerging Markets
Governments in emerging markets want their citizens to have better drugs. The big pharmaceutical firms are keen to sell to them. But they are fighting bitterly over the terms. – The Economist. Should emerging markets compel companies to sell drugs to them? As an economist, I am by nature averse to government coercion. When people [...]
Read the rest of this entry »All-or-Nothing P4P
Many of Medicare’s value-based purchasing (VBP) initiatives offer a continuum of rewards based on provider performance. Whereas all-or-nothing VBP initiatives only grant bonuses to providers who exceed a single threshold, the Medicare VBP programs–such as its hospital VBP program–reward hospitals based a value-based modifier that is proportional to its quality score. One of the reasons [...]
Read the rest of this entry »Optimal Choices of Medicare Part D Plans
Are elderly Medicare beneficiaries able to choose Part D health plans optimally? Many researchers may believe the answer is no. Certain elderly individuals (e.g., those with Alzheimer’s) may be cognitively impaired. Inertia is also a problem; switching plans is mentally taxing and involves a spending a significant amount of time researching plan alternatives. Nevertheless, a [...]
Read the rest of this entry »What most reduces adherence: increasing copayments or decreasing prescription lengths?
According to this article, the answer is: “Both policies decreased medication adherence. The days’ supply policy [decreasing the days supply of each prescription from 100 to 34 days] had a much larger effect on adherence than did the copayment increase. Total Medicaid spending declined from the days’ supply policy, but the copayment policy resulted in [...]
Read the rest of this entry »Estimating the Effects of Consolidating Drugs under Part D or Part B
Currently, most Medicare beneficiaries are able to receive coverage for prescription drugs under Medicare Part D. Some drugs, however, are still covered by Medicare Part B, which covers physician services. These drugs are generally those furnished incident to a physician’s service and are administered using durable medical equipment. To simplify coverage policy, Medicare is considering [...]
Read the rest of this entry »End of the War on Drugs?
According to Businessweek: President Barack Obama’s plan to fight drug abuse and trafficking proposes spending $15.5 billion next year and shifting the emphasis from fighting a war on drugs to treating the problem as a national health issue, the administration’s top drug-policy adviser said in an interview. “It’s a disease, it’s diagnosable and it’s certainly [...]
Read the rest of this entry »Do Economists Support FDA Pre-approval of Drugs?
Conventional wisdom holds that economists advocate for reducing regulation on most policy arenas. Regulation imposes costs and businesses and is often ineffective. Further, as technology and market conditions change, regulations which were originally welfare enhancing can now become archane. The public generally views the FDA’s pre-approval as a worthwhile endeavor. The goal of FDA pre-approval [...]
Read the rest of this entry »Irreversibility and Medical Treatment
Irreversibility occurs when treatment in the current period alters the efficacy of treatments in the future. A paper by Zivin and Neidell (2010) give the following simple example: Examine the following table. In the first scenario, the individual has disease X in two periods. If he takes treatment 1 (T1) then he will recover 6 [...]
Read the rest of this entry »Calculating zero inflation when drug costs rose from $100 to $36,000
A paper by Claudio Lucarelli and Sean Nicholson (2009) examines the skyrocketing cost of colorectal cancer treatment. In 1993, the price of treating these patients with chemotherapy was only $100. By 2005, this price had skyrocketed to $36,000. Is this what is wrong with our health care system? The authors claim that the answer is [...]
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