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 which barred residents from using coupons, which 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 1.9 percentage point (16%) decrease in generic drug use and a 2.9 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 do not find evidence that coupons affect medication adherence or brand-to-brand competition. These results are consistent with prescription drug coupons increasing costs without improving health.

Hospital Ownership and Admission Through the Emergency Department

Using the universe of ER discharge records for multiple states and years, I determine whether hospital ownership affects hospital admission rates for patients who show up in the emergency room. I use within-hospital variation from ownership conversions to estimate hospital fixed-effects regressions and event studies. The results indicate that conversion to for-profit from nonprofit or government ownership results in a 2-3 percentage point increase in admission rates, with the effects concentrated to Medicare and Medicaid patients. These results are consistent with whistleblower lawsuits which allege that for-profit hospitals admit patients through the ED when it is not medically necessary.

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

Since 2012, state Medicaid agencies have begun to offer increased reimbursement for inpatient postpartum long-acting reversible contraception (LARC). The reimbursement has come in the form of unbundling the device payment from the global hospital payment, i.e. reimbursing the hospital specifically for the insertion of LARC. We use variation across states and time in the implementation of the policy to determine how the increased payments affect LARC use, fertility, and adverse birth outcomes. (with Barton Willage)