We study the effect of price caps on the provision of costly effort by pharmaceutical firms using variation in drug discounts generated by a price regulation program that allows eligible hospitals to purchase outpatient drugs at steep discounts. These discounts directly affect drug...

Rising list prices are often used to illustrate the burden of prescription drug spending, but payers routinely negotiate rebates from manufacturers that generate differences between list and net prices. List prices are easily available and affect patient cost-sharing, but net prices are...

A controversial feature of Medicare Part D is its reliance on private insurers to negotiate drug prices and rebates with retail pharmacies and drug manufacturers. Central to this controversy is whether increases in market power--an undesirable feature in most settings--confer benefits in health...

We analyze some of the perverse incentives that may arise under the current Medicare prescription drug benefit design. In particular, risk adjustment for a stand-alone prescription drug benefit creates perverse incentives for prescription drug plans' coverage decisions and/or pharmaceutical...

Selective contracting is an increasingly popular tool for reducing health care costs, but these savings must be weighed against consumer surplus losses from restricted access. In both public and private prescription drug insurance plans, issuers utilize preferred pharmacy networks to reduce drug...

After receiving FDA approval, a generic drug manufacturer can launch "at risk" before conclusion of any patent infringement litigation, but it risks paying damages if it loses. The generic can eliminate the risk by waiting to launch until the appeals process is complete but waiting has downsides...

Despite their importance to the supply of prescription drugs, there has been limited research on pharmacy benefit managers (PBMs) and their vertical relationships to insurers and drug manufacturers. This paper provides an overview of the current state of research on this topic, motivates why...