TY  - JOUR
AU  - Ellison,Sara Fisher
AU  - Wolfram,Catherine
TI  - Pharmaceutical Prices and Political Activity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8482
PY  - 2001
Y2  - September 2001
UR  - http://www.nber.org/papers/w8482
L1  - http://www.nber.org/papers/w8482.pdf
N1  - Author contact info:
Sara Fisher Ellison
MIT, E52-274A
50 Memorial Drive
Cambridge, MA  02142
Tel: 617-253-3821
Fax: 617-253-1330
E-Mail: sellison@mit.edu

Catherine Wolfram
Haas School of Business
University of California, Berkeley
Berkeley, CA  94720-1900
Tel: 510/642-2588
Fax: 510/643-1420
E-Mail: wolfram@haas.berkeley.edu
AB  - Drug prices have been a conspicuous political issue in much of recent history, but no more so than during health care reform debates in 1993 and 1994.  This paper investigates possible effects of political activity on pharmaceutical prices, with a particular focus on the health care reform period.  It evaluates the extent to which pharmaceutical companies slowed the rates at which they increased prices in an attempt to preempt government intervention.  To do so, we characterize companies based on their vulnerability to future price regulation.  We then consider patterns in price movements across companies.  The results suggest that companies whose drugs had longer patent lives and who had recently increased contributions to their corporate Political Action Committees (PACs) slowed price increases during 1992 and 1994 more than their competitors.  It is difficult to distinguish pricing differences across companies in 1993, perhaps because most companies had pledged to keep price increases below the rate of inflation.
ER  -