NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Ali Yurukoglu

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

Working Papers

April 2012Medicare Reimbursements and Shortages of Sterile Injectable Pharmaceuticals
w17987
This paper investigates the rise in shortages of sterile injectable pharmaceutical drugs in the US. I examine a policy change in 2005 that differentially reduced Medicare Part B payments for pharmaceuticals. Drugs whose payments dropped more due to the policy change have had greater increases in shortages. I interpret these results using a model of entry and capacity choice with supply uncertainty. I conclude that Medicare's generous payments before the policy change provided manufacturers with incentives to invest in capacity or induced entry. The effect on total welfare of lowering payments is theoretically ambiguous.

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us