TY  - JOUR
AU  - Pavcnik,Nina
TI  - Do Pharmaceutical Prices Respond to Insurance?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7865
PY  - 2000
Y2  - August 2000
UR  - http://www.nber.org/papers/w7865
L1  - http://www.nber.org/papers/w7865.pdf
N1  - Author contact info:
Nina Pavcnik
Department of Economics
6106 Rockefeller Center
Dartmouth College
Hanover, NH  03755
Tel: 603/646-2537
Fax: 603/646-2122
E-Mail: nina.pavcnik@dartmouth.edu
AB  - Despite the importance of patient insurance in the market for prescription pharmaceuticals, little is known about the impact of insurance on the pricing behavior of pharmaceutical firms. This paper examines the link between insurance and pricing using a unique policy experiment from Germany.  Starting in 1989, a maximum reimbursement for a given medicine replaced a flat prescription fee. This change in insurance reimbursement exposes the patient to the price of a prescribed product. Using a product level panel dataset covering several therapeutic categories before and after the change in insurance reimbursement, I find that producers significantly decrease prices after the change in insurance.  Price declines are most pronounced for brand name products. Moreover, branded products that face more generic competitors reduce prices more.
ER  -