Unbiased Analysis of Today's Healthcare Issues

Part B drug reimbursement

In the past Medicare has reimbursed physicians that administer Part B drugs–typically injectable medications administered in a physician’s office–at 6% of the drug’s cost.  The 6% aims to cover the cost of purchasing and storing the drug as well as administering it.  Because physician reimbursement is proportional to the cost of the drug, physicians have […]

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Are drug prices higher or lower in the U.S.

The high price of prescription drugs in the U.S. has received a lot of press in recent years.  However, are drug prices really higher in the U.S. than other countries?  Tomas Philipson makes an interesting point regarding U.S. drug prices: It is well known that free-market prices of branded drugs still on patent are higher in […]

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How does cost sharing affect drug utilization?

Any economist knows that if you raise the price of a good, demand goes down.  Thus, one should not be surprised to find numerous studies that show that increased cost sharing decreases drug utilization.  But how does drug utilzation decrease?  Is it along the extensive margin (i.e., the decision to initiate the drug) or along the intensive margin […]

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Orphan Drugs

How can policymakers incentivize innovators to invest in new treatments for rare diseases? One solution policymakers invoked was enacting the Orphan Drug Act of 1983 which provided a number of benefits–including lower tax rates–for innovators who created drugs to treat rare diseases. Was it effective? According to a paper by Miller and Lanthier (2016), the […]

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Off label prescribing: Q&A

The Duke-Margolis Center for Health Policy has a great overview of some of the issues related to off-label prescribing.  Below is a summary of some key points from this article. What is off-label prescribing? Off-label prescribing and use can take many forms, such as use of an approved drug for an unapproved clinical indication, use at […]

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Can reducing cost sharing save money?

Typically, economists believe that subsidizing goods or services increases utilization and the total amount of funds spent on a good. The RAND Health Insurance Experiment (HIE) proved that lowering cost sharing increases total spending on medical goods. Although reducing cost sharing on all medical care is likely to increase total healthcare spending, subsidizing highly effective therapies can actually […]

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Canada’s single payer system doesn’t cover drugs?

Yes it is true.  Wang et al. (2015) report: Unlike physician and hospital services, which are universal in Canada, coverage for prescription drugs dispensed outside hospitals falls outside the Canada Health Act and provincial governments only provide public drug programs for some population groups,primarily seniors and social assistance recipients…Canada is still the only country that […]

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Risk Sharing Agreements video

Previously, I described a paper on risk sharing agreements in the US.  The National Pharmaceutical Council has a nice video from one of the authors that also summarizes the findings.  

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“Best price”

What price does Medicaid pay for drugs? The answer is, the “best price”.  What is “best price?” The 1990 Omnibus Reconciliation Act (OBRA) codified that pharmaceutical manufacturers must give Medicaid steep discounts in order to receive coverage by state Medicaid agency.  How big are the discounts?  The answer is the larger of a fixed percentage of the […]

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The end of dose-based drug pricing?

A Health Affairs post by Dana Goldman and Darius Lakdawalla argues that dose-based pricing for pharmaceuticals is suboptimal.  They make a clear distinction between typical goods, where cost and benefits are roughly proportional to quantity consumed, and pharmaceuticals. Buying two bunches of bananas naturally costs twice as much as one bunch. Twice as many bananas can […]

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