Who Benefits When Prescription Drug Manufacturers Offer Copay Coupons?

2019 ◽  
Vol 65 (8) ◽  
pp. 3758-3775 ◽  
Author(s):  
Gregory J. King ◽  
Xiuli Chao ◽  
Izak Duenyas
Keyword(s):  
Prescription Drug ◽  
Prescription Drugs ◽  
Operations Management ◽  
Insurance Industry ◽  
Empirical Work ◽  
The United States ◽  
Policy Implications ◽  
Insurance Companies ◽  
High Price ◽  
Multiple Drug

The rising cost of prescription drugs is a concern in the United States. To manage drug costs, insurance companies induce patients to choose less-expensive medications by making them pay higher copayments for more-expensive drugs, especially when multiple drug options are available to treat a condition. However, drug manufacturers have responded by offering copay coupons—coupons intended to be used by those already with prescription drug coverage. Recent empirical work has shown that such coupons significantly increase insurer costs without much benefit to patients, who incur lower out-of-pocket expenses with coupons but may eventually see higher costs passed to them. As a result, there is pressure from the insurance industry and consumer advocacy groups to ban copay coupons. In this paper we analyze how copay coupons affect patients, insurance companies, and drug manufacturers, while addressing the question of whether insurance companies would in fact always benefit from a copay coupon ban. We find that copay coupons tend to benefit drug manufacturers with large profit margins relative to other manufacturers, while generally, but not always, benefiting patients; insurer costs tend to increase with coupons from high-price drug manufacturers and decrease with coupons from low-price manufacturers. Although often helping drug manufacturers and increasing insurer costs, we also identify situations in which copay coupons benefit both patients and insurers. Thus, a blanket ban on copay coupons would not necessarily benefit insurance companies. In addition to the policy implications of our work, we make concrete managerial recommendations to insurers. We discuss how they should set formulary selection policies taking into account the fact that drug manufacturers may offer coupons; and we suggest how they can benefit from subsidizing coupons from drug manufacturers with low-price drugs, or from having drug manufacturers compete on price, to receive a favorable formulary position (i.e., copay). This paper was accepted by Yossi Aviv, operations management.

scholarly journals Prescription Opioid Abuse: Gleaning insights from hospital and vital records data

2017 ◽  
Vol 9 (1) ◽  
Author(s):  
Reka Sundaram-Stukel ◽  
Ousmane Diallo ◽  
Benjamin Wiseman ◽  
Richard E. Miller
Keyword(s):  
Mental Health ◽  
Prescription Drug ◽  
Prescription Drugs ◽  
The United States ◽  
Hospital Charges ◽  
Prescription Opioids ◽  
Opioid Prescription ◽  
Discharge Data ◽  
Operative Recovery ◽  
The Impact

ObjectiveIn this paper we used hospital charges to assess costs incurred dueto prescription drug/opioid hospitalizationsIntroductionThere is a resurgence in the need to evaluate the economic burdenof prescription drug hospitalizations in the United States. We used theWisconsin 2014 Hospital Discharge data to examine opioid relatedhospitalization incidence and costs. Fentanyl, a powerful syntheticopioid, is frequently being used for as an intraoperative agent inanesthesia, and post-operative recovery in hospitals. According to a2013 study, synthetic Fentanyl is 40 times more potent than heroinand other prescription opioids; the strength of Fentanyl leads tosubstantial hospitalizations risks. Since, 1990 it has been availablewith a prescription in various forms such as transdermal patches orlollipops for treatment of serious chronic pain, most often prescribedfor late stage cancer patients. There have been reported fatal overdosesassociated with misuse of prescription fentanyl. In Wisconsin numberof total opioid related deaths increased by 51% from 2010 to 2014with the number of deaths involving prescription opioids specificallyincreased by 23% and number of deaths involving heroin increasedby 192%. We hypothesized that opioids prescription drugs, as a proxyof Fentanyl use, result in excessive health care costs.MethodsOpioid hospitalizations was defined as any mention of the ICD9codes (304,305) in any diagnostic field or the mention of (:E935.09) onthe first listed E-code. Our analysis used the Heckman 2-stage model,a method often used by Economists in absence of randomized controltrials. In presence of unobserved choice, for example opioid relatedhospitalizations, there usually is a correlation between error in anunderlying function (fentanyl prescription) and an estimated function(hospital charges) that introduces a selection bias. Heckman treats thiscorrelation between errors as an omitted variable bias. Therefore, weestimate a Heckman two step model using hospitalization: where theselection function is the probability of being hospitalized for syntheticopioid via logistic regression. Finally, we estimate the hospitalcharges realized if the patient was given opioids.ResultsMale patients are significantly more likely to be hospitalized foropioids than are female patients; while white patients are significantlymore likely to be admitted for opioid usage than other racialgroups. We also find that comorbid factors, such as mental health,significantly impact hospital charges associated with opioid use. Wefind that persons with private health insurance are associated withhigher rates of opioid use.ConclusionsUsing a Heckman two step approach we show that comorbidconditions such as mental health, Hepatitis C, injuries, etc significantlyaffect hospital charges associated with hospitalization. We usethese findings to explore the impact of the 2013 rule mandatingdoctors share opioid prescription information on the incidence ofopioid related death and hospital charges associated with opioidprescriptions. This work is policy relevant because alternatives toopioid prescription such as meditation, pain management therapiesmay be relevant.

Patterns in Direct-to-Consumer Prescription Drug Print Advertising and Their Public Policy Implications

1996 ◽  
Vol 15 (1) ◽  
pp. 63-75 ◽  
Author(s):  
Martin S. Roth
Keyword(s):  
Public Policy ◽  
Prescription Drug ◽  
Prescription Drugs ◽  
Policy Implications ◽  
New Drugs ◽  
Advertising Agencies ◽  
Print Advertisements ◽  
Direct To Consumer ◽  
Pharmaceutical Manufacturers ◽  
Therapeutic Class

Through a content analysis, the author identifies several patterns in direct-to-consumer prescription drug print advertisements. In general, many of the advertised brands are market leaders within their therapeutic class, are targeted at a broad patient base, and are relatively new drugs used for chronic and frequently occurring diseases. Most of the disease states and associated symptoms and treatments for which prescription drugs are advertised to consumers are easily understood relative to other diseases. Thus, the advertisements attempt to communicate information about diseases and products that consumers are likely to understand. Pharmacists’ assessments of advertising information content reveals that the majority of advertisements present a “fair balance” of benefit and risk information but occasionally omit information that may be useful to consumers. The author concludes by discussing public policy and social marketing implications for the FDA, pharmaceutical manufacturers, and medical advertising agencies.

Road Safety Engineering: Role for Insurance Companies?

2000 ◽  
Vol 1734 (1) ◽  
pp. 7-11
Author(s):  
Sany R. Zein ◽  
Frank Navin
Keyword(s):  
Road Safety ◽  
Insurance Industry ◽  
The United States ◽  
Public Image ◽  
Insurance Companies ◽  
Safety Engineering ◽  
Insurance Company ◽  
Driver Education ◽  
Engineering Programs ◽  
Ultimate Responsibility

Over the last 10 years there has been a growing trend among automobile insurance companies to become involved in road safety engineering programs. While the involvement of insurance companies in driver education and vehicle design initiatives is common, insurance company initiatives aimed at the engineering element of road safety is a relatively new trend. This research summarizes the major road safety engineering programs undertaken by six insurance companies in Australia, Canada, and the United States, and presents some of the results achieved. The research finds that the immediacy of the benefit derived from road safety engineering improvements, coupled with an expanding knowledge base in this field, are contributing to the growth in interest in road safety among insurance companies. The financial interest of insurance companies in reducing crash frequencies and severities, as well as any related positive public image that road safety advocacy can generate, will likely mean that more insurance companies will be exploring avenues for participation in road safety programs. Opportunities exist for cooperation between the insurance industry and transportation engineers, and they should be pursued for mutual benefit. Although the ultimate responsibility and authority for roads should remain with public agencies, the incentive and emphasis that insurance companies place on road safety provide a unique opportunity to help reduce the daily risks that we face in a mobile world.

scholarly journals Political Business Cycles and Their Policy Implications: An Extension of Alesina`s Model

2009 ◽  
Vol 24 (1) ◽  
pp. 127-147
Author(s):  
Chung Ji Eun ◽  
Jung Kwang Ho
Keyword(s):  
Business Cycles ◽  
Interest Rates ◽  
Empirical Work ◽  
The United States ◽  
Policy Implications ◽  
Future Research ◽  
Policy Outcomes ◽  
Money Growth ◽  
Political Business Cycles ◽  
Stock Market Performance

This paper reviews and empirically tests the most recent theoretical and empirical work on political business cycles in the United States. It focuses on the rational partisan theory of Alesina et al. (1997) and extends their data from 1994 to 2005. We tested three different political business cycle modles-the opportunistic, traditional partisan, and rational partisan models-to observe whether they remain valid. Overall, our results show that the rational partisan model outperforms both the opportunistic model and the traditional partisan modls in explaining the variations of monetary and fiscal policy outcomes, which are consistent with Alesina et al.'s work (1997). More specifically, we found a significant partisan effect on money growth, a weak partisan effect on the federal funds rate, and no partisan effect on other interest rates including the discount rate, three-month Treasury bill, and ten-year Treasury note. Our finding on the partisan effects of money growth resemble those of Alesina (1988), but our results on interest rates differ. In addition, we found a strong partisan effect on the budget deficit (higher during republican administrations) and no partisan effect on the level of government transfers. Both findings are consistent with Alesina's work (1988). Future research is required to identify how partisan effects vary across both developed and developing countries and how stock market performance and the role of the central bank during presidential elections are related.

The Right Price

2021 ◽  
Author(s):  
Peter J. Neumann ◽  
Joshua T. Cohen ◽  
Daniel A. Ollendorf
Keyword(s):  
United States ◽  
Prescription Drug ◽  
Prescription Drugs ◽  
Drug Market ◽  
The United States ◽  
Value Assessment ◽  
Price Controls ◽  
Drug Prices ◽  
Lower Drug ◽  
The Right

New medications can provide substantial benefits, but high prescription drug prices have led to calls to contain costs. Even after accounting for discounts and rebates, average prices of leading brand-name drugs in the United States are two to four times higher than in other wealthy countries, raising questions about what these higher prices are buying us. With the advent of ever more targeted and powerful treatments, including cell- and gene-based therapies with multimillion dollar price tags, the need for sensible drug pricing policies will intensify. Price controls, common in other countries, seem appealing, but these measures can discourage innovation. Moreover, on what basis should policymakers develop such controls? This book argues that pricing prescription drugs to reflect the value they bring to patients, families, and society achieves the right balance. The book reviews the distinguishing features of the prescription drug market and explains why simple solutions like price controls and importing drugs from countries with lower drug prices are problematic without explicit assessments of value. It then describes how economists measure value, how value assessment for drugs is now being used in the United States, and what must happen going forward to overcome challenges.

scholarly journals Influencing Factors of Corporate Performance of Life Insurance Companies – Evidence from China

2018 ◽  
Vol 7 (2) ◽  
pp. 219
Author(s):  
Maoguo Wu ◽  
Yanyuan Wang
Keyword(s):  
Life Insurance ◽  
Corporate Performance ◽  
Insurance Industry ◽  
Channel Structure ◽  
Policy Implications ◽  
Insurance Companies ◽  
Chinese Government ◽  
Life Insurance Industry ◽  
State Pension ◽  
The Impact

At present, the life insurance industry in China is still in the initial stage of development, which is characterized by limited scale, low penetration rate and low intensity. However, the large population base, the proliferation of middle classes, and the continuously improving socio-economic environment in China imply underlying developmental opportunities for the life insurance industry. Gaps in state pension have appeared owing to the issue of aging population, which signals that insurance companies with commercial properties may become an integral part of resident endowment. Ever since 2014, Chinese government has implemented numerous policies that are beneficial to the life insurance industry, for instance, diversifying investment channels of premiums, allowing a certain proportion of premiums in risky investments, and removing the restriction that the rate of return on common stakeholders’ equity (ROE) of participating insurance is capped at 5%. This paper constructs a panel data of 36 Chinese life insurance companies from 2010 to 2014. A serial of preliminary tests are taken in order to avoid spurious regression. By dint of the fixed effect model and panel threshold model, the paper analyzes the relation between operation-related factors and the corporate performance of life insurance companies. According to empirical findings, bancassurance income rate, professional insurance agency income rate, participating insurance income rate, group insurance income rate, company scale and solvency adequacy ratio are negatively correlated with corporate performance. When life insurance companies are associated with banks in capitals, bancassurance income rate positively influences corporate performance. The paper also investigates the impact of specific marketing channel structure and product structure on corporate performance. Policy implications are proposed accordingly.

scholarly journals Mindset shifts for the Fourth Industrial Revolution: Insights from the life insurance sector

2021 ◽  
Vol 19 ◽  
Author(s):  
Lynne Molloy ◽  
Linda Ronnie
Keyword(s):  
Life Insurance ◽  
Industrial Revolution ◽  
Resistance To Change ◽  
Insurance Industry ◽  
Empirical Work ◽  
Organisational Change ◽  
Readiness For Change ◽  
Insurance Companies ◽  
Fourth Industrial Revolution ◽  
Life Insurance Industry

Orientation: The Fourth Industrial Revolution (4IR) challenges organisations to embrace and adapt to a rising wave of technological innovation to remain relevant.Research purpose: Based on the interaction between technology change, the industry as a whole and the perceptions of individuals within organisations, this study explored how South African life insurance companies view the 4IR and how they are responding to the changes prompted by it.Motivation for study: This study sought to establish a baseline for practitioners in the life insurance industry to navigate the 4IR more effectively and for researchers to undertake further inquiry into specific enablers and inhibitors of technology transformation.Research approach/design and method: The study took an exploratory, qualitative approach. Interviews were conducted with 12 organisational leaders, purposively selected from a range of large, medium and start-up life insurers in South Africa. A thematic analysis method was used to analyse the data.Main findings: Four key themes related to organisational change and resistance to change within the industry were found: lack of urgency; lack of agility; partnerships and ecosystems; and abilities of people and leaders.Practical/managerial implications: Managers should recognise the urgency for proactive change, encourage collaborative practices by leveraging ecosystems and forming partnerships and ensure lifelong learning of employees.Contribution/value-add: There is a paucity of empirical work on managerial perceptions of the 4IR and the readiness for change within the life insurance industry. This study contributes to this debate and provided insights on organisational views at a management level.

scholarly journals International Real Estate Review

1998 ◽  
Vol 1 (1) ◽  
pp. 17-44
Author(s):  
Gregory H. Chun ◽  
Keyword(s):  
Real Estate ◽  
Life Insurance ◽  
Institutional Investors ◽  
Empirical Work ◽  
The United States ◽  
Insurance Companies ◽  
Portfolio Decisions ◽  
The United Kingdom ◽  
Real Estate Assets ◽  
Ownership Patterns

In this paper we examine the institutional real estate ownership patterns of life insurance companies for 10 countries over the period 1986-96. The countries included are ustralia, Austria, Belgium, France, Italy, the Netherlands, Spain, Sweden, the United Kingdom, and the United States. We find that most institutional investors worldwide have shifted out of real estate assets and into stocks and bonds over the last decade. We then investigate whether this behavior is the result of changing investor perceptions or a shift in stock market apitalization. To test this hypothesis, the paper derives measures of ex ante real estate returns following previous empirical work in finance. The results indicate that only a small proportion of what is driving institutional investors' real estate portfolio decisions is actually explained by changing investor perceptions and lagged unexpected excess returns.

Healthworlds, Cultural Health Toolkits, and Choice: How Acculturation Affects Patients’ Views of Prescription Drugs and Prescription Drug Advertising

2019 ◽  
Vol 29 (10) ◽  
pp. 1419-1432
Author(s):  
Crystal Adams ◽  
Brittany M. Harder ◽  
Anwesa Chatterjee ◽  
Liza Hayes Mathias
Keyword(s):  
United States ◽  
Focus Groups ◽  
Prescription Drug ◽  
Prescription Drugs ◽  
Treatment Options ◽  
The United States ◽  
Drug Advertising ◽  
Direct To Consumer ◽  
Direct To Consumer Advertising ◽  
Level Of Acculturation

How do minorities differ from Whites in their interactions with the broader consumeristic health culture in the United States? We explore this question by investigating the role that acculturation plays in minority and White patients’ views of prescription drugs and the direct-to-consumer advertising (DTCA) of prescription drugs. Drawing on data from six race-based focus groups, we find that patients’ views of prescription drugs affect their responses to DTCA. While both minorities and Whites value the information they receive from DTCA, level of acculturation predicts how minorities use the information they receive from DTCA. Less acculturated minorities have healthworlds and cultural health toolkits that are not narrowly focused on prescription drugs. This results in skepticism on the part of less acculturated minorities toward pharmaceuticals as treatment options. In this article, we argue that researchers must consider the role acculturation plays in explaining patients’ health dispositions and their consumeristic health orientations.

scholarly journals Outcome-Based Pricing for New Pharmaceuticals via Rebates

2020 ◽  
Author(s):  
Elodie Adida
Keyword(s):  
Prescription Drugs ◽  
Insurance Coverage ◽  
Treatment Success ◽  
The United States ◽  
Healthcare Management ◽  
List Price ◽  
High Price ◽  
Transfer Payment ◽  
Pharmaceutical Firm ◽  
Risk Sensitive

The price of new brand-name prescription drugs has been rising fast in the United States. For example, the Amgen cholesterol drug Repatha had an initial list price of $14,523 per year. Patients, even with insurance coverage, must pay out of pocket a significant portion of this price. The treatment might not be successful, and this possibility reduces risk-sensitive patients’ incentives to purchase the drug. The high price together with the chance of negative treatment outcomes may lead payers to deny coverage for the drug. Outcome-based pricing has been proposed as a way to reallocate the risks and improve both payer resource allocation and patient access to drugs. According to an outcome-based rebate contract between Amgen and Harvard Pilgrim Healthcare, if a patient on Repatha suffers a heart attack or a stroke, both patient and insurer are refunded the cost of the drug. We use a stylized model to analyze the effect of outcome-based pricing via rebates. Our model captures the interaction between heterogenous, price-sensitive, risk-sensitive patients who decide whether to purchase the drug; a payer deciding whether to provide coverage for the drug; and a price-setting pharmaceutical firm seeking to maximize expected profits. We find that, in many cases, a pharmaceutical firm and payer cannot simultaneously benefit from outcome-based pricing, and who will benefit is determined by the probability of treatment success. Outcome-based pricing thus appears unlikely to solve the issues of high drug prices and high payer expenditures. However, supplementing outcome-based pricing with a transfer payment from firm to payer can make payer and firm (but not necessarily the patients) better off than under uniform pricing when the drug has a low chance of success. This paper was accepted by Stefan Scholtes, healthcare management.

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