Nonlinear pricing in drug benefits and medication use: the case of statin compliance in Medicare Part D.

ABSTRACT:

Objective

To examine how enrollees' statin compliance responds to expected prices in Medicare Part D, which features a nonlinear price schedule due to a coverage gap.

Data sources/study setting

Prescription Drug Event data for a 5 percent random sample of Medicare Advantage Prescription Drug Plan enrollees in 2008 who did not receive a low-income subsidy.

Study design

We analyze statin compliance prior to the coverage gap, where the "effective price" is higher than the actual copayment for drugs because consumers anticipate that more spending will make them more likely to reach the gap. We construct each enrollee's effective price as her expected price at the end of the year, which is the weighted average between pre-gap and in-gap copayments with the weight being the

SUBMITTER: Jung K 

PROVIDER: S-EPMC4231578 | biostudies-literature | 2014 Jun

REPOSITORIES: biostudies-literature