The Effects of Prescription Drug Coupons on Generic Drug Use, Adherence, and Competition: Evidence from Three Drug Classes

Prescription drug coupons—offers from pharmaceutical companies to pay a portion of a patient’s out-of-pocket prescription cost—are the subject of a current and growing debate. Insurance companies and governments are concerned that coupons increase costs without improving health by shifting patients away from generic drugs and towards costly, brand-name drugs. Pharmaceutical companies allege that coupons improve medication adherence, thus improving heath and lowering overall healthcare spending. While the debate has continued, coupon use has increased to 18% of prescription claims in 2017 (IQVIA, 2018). I use insurance claims from 2007 to 2016 from a large, national insurer to estimate the effect of coupons on generic drug use, medication adherence, and brand-to-brand competition for drugs in three drug classes: statins, antipsychotics, and acne treatments. I take advantage of a law in Massachusetts that barred residents from using coupons, and was amended in 2012 to allow coupons only for drugs without a generic equivalent, to estimate difference-in-differences and triple-difference models. I find that coupons decrease generic drug use by shifting patients towards brand-name drugs and away from generic equivalents. I estimate a 6.1 percentage point (10%) decrease in generic drug use and a 9.3 percentage point (35%) increase in the use of “dispense as written” orders. I find no evidence that coupons shift patients away from older, generic drugs and towards newer, brand-name drugs. Additionally, I find no evidence that coupons affect medication adherence or brand-to-brand competition. A back of the envelope calculation suggests that coupons increase insurer spending by $25 million in my sample alone. These results are consistent with prescription drug coupons increasing costs without improving health.

Hospital Ownership and Admission Through the Emergency Department

As the number of for-profit hospitals has increased over the last few decades, the debate over whether for-profit hospitals are any different from nonprofit hospitals has continued. Many opponents of for-profit hospitals point to a number of whistleblower lawsuits in which the Department of Justice alleges that certain for-profit hospital chains pressure physicians to admit patients through the emergency department when it is not medically necessary (Department of Justice, 2014, 2018a, 2018b, 2019). There has been a similar debate within economics, with numerous studies providing largely mixed results. Most of the previous studies have focused on patients in the inpatient setting; we do not whether ownership affects the likelihood that an emergency department patient becomes an inpatient, which is the route of admission for approximately 50% of inpatients (Greenwald et al., 2016). In this paper, I estimate the extent to which for-profit hospital ownership affects the probability that a patient who visits an emergency department is admitted to the hospital. Leveraging within-hospital variation induced by ownership changes, I find that for-profit ownership increases the probability of inpatient admission by 2.3 percentage points (13%) for Medicare patients and 1.4 percentage points (8.2%) for Medicaid patients, with the largest increases occurring in diagnosis categories such as abdominal pain (2.8 percentage points/90%), other injuries and conditions due to external causes (1.5 percentage points/47%) and nonspecific chest pain (8.3 percentage points/46%). However, I also find evidence that increased admission rates occur when hospitals convert from for-profit in addition to to for-profit, indicating that the estimated effect may actually be measuring the effect of hospital system membership and not ownership.

Non-Monetary Obstacles to Medical Care: Evidence from Postpartum Contraceptives

In this paper we use variation in state-level policies to test whether non-monetary costs are meaningful obstacles to health care. Starting in 2012, most state Medicaid agencies made long-acting reversible contraceptives (LARCs, which include IUDs and implants) available in the hospital immediately following delivery of a child, eliminating some of the time-cost and stress associated with getting a LARC. Policymakers and advocates stress that providing access to immediate postpartum LARCs can reduce unintended and short-interval pregnancies, which are associated with adverse neonatal outcomes. We test whether lowering non-monetary costs increases LARC use, decreases birth rates, and improves birth outcomes. We use data from the National Vital Statistics System and quarterly Medicaid claims for LARCs to estimate event studies and difference-in-differences models. We find no evidence that Medicaid coverage for inpatient post-partum LARCs affected LARC use or birth outcomes. (with Barton Willage)