NBER Publications by Wesley Yin

A controversial feature of Medicare Part D is its reliance on private insurers to negotiate drug prices and rebates with retail pharmacies and drug manufacturers. Central to this controversy is whether increases in market power—an undesirable feature in most settings—confer benefits in health insurance markets, where larger buyers may obtain better prices for their members. We test whether insurers that experience larger enrollment increases due to Part D negotiate lower drug prices with pharmacies. Overall, we find that 100,000 additional insureds lead to 2.5-percent lower pharmacy prices negotiated by the insurer, and 5-percent reductions in pharmacy profits earned on prescriptions filled by enrollees of that insurer. Estimated enrollment effects are much larger for drugs with therapeuti...

Features of Part D gave rise to broad concern that the drug benefit would negatively impact prescription utilization among the six million dual eligible beneficiaries, either during the transition from state Medicaid to Part D coverage, or in the long-run. At the same time, Part D contained other features, such as its auto-enrollment and premium subsidization policies, which were designed to safeguard utilization for this vulnerable group. Using national retail pharmacy claims, we examine the experience of dual eligibles during the first 18 months of Part D. We find no evidence that Part D adversely affected pharmaceutical utilization or out-of-pocket expenditures in the transition period, or in the 18 months subsequent to Part D implementation.