NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Wesley Yin

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Working Papers

May 2014The Market for High-Quality Medicine
with Daniel Bennett, Wesley Yin: w20091
This study examines the effect of chain store entry on drug quality and prices in the retail pharmacy market in Hyderabad, India. In contrast to prevailing mom-and-pop pharmacies, chains exploit scale economies to offer high-quality drugs at lower cost. With a unique data set and a natural experiment methodology, we show that chain entry leads to a relative 5 percent improvement in drug quality and a 2 percent decrease in prices at incumbent retailers. These changes do not depend on the socioeconomic status of consumers, suggesting that chain entry improves consumer welfare throughout the market. Despite the likely role of asymmetric information in this market, we show that consumers partially infer these quality improvements. Our findings suggest that in markets with asymmetric informatio...
August 2010Insurers' Negotiating Leverage and the External Effects of Medicare Part D
with Darius N. Lakdawalla, Wesley Yin: w16251
Public financing of private health insurance may generate external effects beyond the subsidized population, by influencing the size and bargaining power of health insurers. We test for this external effect in the context of Medicare Part D. We analyze how Part D-related insurer size increases impacted retail drug prices negotiated by insurers for their non-Part D commercial market. On average, Part D lowered retail prices for commercial insureds by 5.8% to 8.5%. The cost-savings to the commercial market amount to $3bn per year, which approximates the total annual savings experienced by Part D beneficiaries who previously lacked drug coverage.
September 2009Insurer Bargaining and Negotiated Drug Prices in Medicare Part D
with Darius Lakdawalla, Wesley Yin: w15330
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...
October 2008The impact of Medicare Part D on Medicare-Medicaid Dual-eligible Beneficiaries' Prescription Utilization and Expenditures
with Anirban Basu, Wesley Yin, G. Caleb Alexander: w14413
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.

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