TY - JOUR

T1 - More cost-sharing, less cost?

T2 - Evidence on reference price drugs

AU - Herr, Annika

AU - Stühmeier, Torben

AU - Wenzel, Tobias

N1 - Funding Information: We would like to thank Kurt Brekke, Nils Gutacker, Ulrich Heimeshoff, Olena Izhak, Arndt Reichert, Martin Salm, Hendrik Schmitz, Moritz Suppliet, Stephan L. Thomsen, and Sebastian Wichert for helpful comments. We are grateful for comments and discussions with the seminar audiences at the University of Augsburg, at the KOF seminar at the ETH Zürich, LUH, and at the Center for Health Economics in York. We also thank the participants of the Empirical Health Economics Workshop in Wuppertal 2017, the Vereinstagung in Freiburg 2018, the Euhea conference in Maastricht 2018 and the annual conference of the dggö in Nürnberg (online) 2021 for helpful discussions. We are grateful to IQVIA (former IMS Health) for providing the data. The research has been started while we worked at the Düsseldorf Institute for Competition Economics (DICE) at Heinrich Heine University. Annika Herr acknowledges financial support by the German Research Foundation (DFG) (grant HE 6825/2-1). Open Access funding enabled and organized by Projekt DEAL.

PY - 2023/1/2

Y1 - 2023/1/2

N2 - This paper evaluates the causal effects of changes in reference prices (RP) on prices, copayments, and overall expenditures for off-patent pharmaceuticals. With reference pricing, firms set prices freely and the health plan covers the expenses only up to a certain threshold. We use quarterly data of the German market for anti-epileptics at the package level and at the active substance level and exploit that the RP has been adjusted in some of the active substances but not in others in a difference-in-differences framework. At the product level, we find that a lower RP reduces prices for both brand-name drugs and generics, but leads to higher copayments, especially for brand-name drugs. At the aggregate level, we find that a lower RP leads to savings for the public health insurer since revenues decrease substantially for brand-name firms and, to a lesser extent, also for generic firms. Overall expenditures (payments by the health insurer and the patients) for brand-name drugs decrease in proportion to the decrease in the RP, while the adjustment does not significantly influence overall expenditures for generics.

AB - This paper evaluates the causal effects of changes in reference prices (RP) on prices, copayments, and overall expenditures for off-patent pharmaceuticals. With reference pricing, firms set prices freely and the health plan covers the expenses only up to a certain threshold. We use quarterly data of the German market for anti-epileptics at the package level and at the active substance level and exploit that the RP has been adjusted in some of the active substances but not in others in a difference-in-differences framework. At the product level, we find that a lower RP reduces prices for both brand-name drugs and generics, but leads to higher copayments, especially for brand-name drugs. At the aggregate level, we find that a lower RP leads to savings for the public health insurer since revenues decrease substantially for brand-name firms and, to a lesser extent, also for generic firms. Overall expenditures (payments by the health insurer and the patients) for brand-name drugs decrease in proportion to the decrease in the RP, while the adjustment does not significantly influence overall expenditures for generics.

KW - brand-name

KW - cost-sharing

KW - generics

KW - pharmaceuticals

KW - reference pricing

UR - http://www.scopus.com/inward/record.url?scp=85143410419&partnerID=8YFLogxK

U2 - 10.1002/hec.4627

DO - 10.1002/hec.4627

M3 - Article

C2 - 36415146

AN - SCOPUS:85143410419

VL - 32

SP - 413

EP - 435

JO - Health Economics (United Kingdom)

JF - Health Economics (United Kingdom)

SN - 1057-9230

IS - 2

ER -