Abstract

http://ssrn.com/abstract=1809665
 


 



Should Medicare Adopt the Veterans Health Administration Formulary?


Austin Frakt


Government of the United States of America - Department of Veterans Affairs (VA); Boston University - School of Medicine; Boston University - School of Public Health

Steven D. Pizer


Boston University - School of Public Health; Department of Veterans Affairs (VA)

Roger Feldman


University of Minnesota - Twin Cities - Department of Economics

April 14, 2011

Health Economics, April 2011

Abstract:     
Since January 2006 all Medicare beneficiaries have been eligible to obtain outpatient prescription drug coverage through private stand-alone drug plans (PDPs). We estimate a model of beneficiary demand for PDPs and use it to compute the loss of consumer surplus due to tightening PDP formularies to the level found in the Veterans Health Administration (VA). Under a generous assumption of cost savings attributed to increased bargaining leverage associated with exclusion of more drugs from formularies, we find the loss in consumer surplus to be smaller than the financial savings that could be shared between Medicare and beneficiaries. According to our estimates, Medicare beneficiaries could be compensated for the loss in consumer surplus associated with tighter PDP formularies with the savings generated by such formularies.

Number of Pages in PDF File: 23

Keywords: Medicare, Part D, prescription drugs, welfare analysis, formulary, VA

JEL Classification: I18, D6

Accepted Paper Series


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Date posted: April 25, 2011  

Suggested Citation

Frakt, Austin and Pizer, Steven D. and Feldman, Roger, Should Medicare Adopt the Veterans Health Administration Formulary? (April 14, 2011). Health Economics, April 2011. Available at SSRN: http://ssrn.com/abstract=1809665

Contact Information

Austin Frakt (Contact Author)
Government of the United States of America - Department of Veterans Affairs (VA)
150 S. Huntington Ave (152H)
Boston, MA 02130
United States
Boston University - School of Medicine ( email )
Boston, MA 02118
United States
Boston University - School of Public Health ( email )
150 S. Huntington Ave (152H)
Boston, MA 02130
United States
Steven D. Pizer
Boston University - School of Public Health ( email )
150 S. Huntington Ave.
Mail Stop 152H
Boston, MA 02130
United States
857-364-6061 (Phone)
857-364-4511 (Fax)
HOME PAGE: http://www.hcfe.research.va.gov
Department of Veterans Affairs (VA)
810 Vermont Avenue NW
Washington, DC 20420
United States
Roger Feldman
University of Minnesota - Twin Cities - Department of Economics ( email )
271 19th Avenue South
15-205 Phillips-Wangensteen
Minneapolis, MN 55455
United States
612-624-5669 (Phone)
Feedback to SSRN


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