Affiliation:
1. Dartmouth College and NBER (email: )
2. MIT (email: )
3. MIT and NBER (email: )
Abstract
This paper studies how insurance coverage policies impact pharmaceutical innovation. In the United States, most patients obtain prescription drugs through insurance plans administered by Pharmacy Benefit Managers (PBMs). Beginning in 2012, PBMs began refusing to provide coverage for many newly approved drugs when cheaper alternatives were available. We document a shift in pharmaceutical R&D strategies after this policy took effect: therapeutic classes at greater risk of exclusion experienced a relative reduction in investments. This shift reduced development of drug candidates that appear more incremental: that is, those in drug classes with more preexisting therapies and less scientifically novel research. (JEL G22, I13, L65, O31)
Publisher
American Economic Association
Subject
Management, Monitoring, Policy and Law,Geography, Planning and Development
Cited by
3 articles.
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