Does Cost Sharing Really Reduce Inappropriate Prescriptions?

45 Pages Posted: 6 Apr 2010

See all articles by Joan Costa-Font

Joan Costa-Font

London School of Economics & Political Science (LSE)

Marin Gemmill

London School of Economics & Political Science (LSE)

Date Written: March 2010

Abstract

This paper explores different empirical strategies to examine the effect of cost sharing for prescription drugs in some dimensions of medication-related quality, namely the probability of inappropriate prescription drug use among United States seniors. Using data from 1996 to 2005, we explore various specifications that correct for sample selection, endogeneity¸ and unobserved heterogeneity. We find a small, but measurable, negative price elasticity for inappropriate drug use with respect to self-reported average out-of-pocket costs for all drugs consumed. That is, user fees reduce the use of potentially inappropriate medications, however the elasticity of cost sharing is lower than that of drugs in general and the price elasticity is relatively close to zero, suggesting that any quality improvements from co-payments are small.

JEL Classification: I18, I10

Suggested Citation

Costa-Font, Joan and Gemmill, Marin, Does Cost Sharing Really Reduce Inappropriate Prescriptions? (March 2010). CESifo Working Paper Series No. 3002, Available at SSRN: https://ssrn.com/abstract=1582848

Joan Costa-Font (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://https://joancostaifont.org/

Marin Gemmill

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 (0)2079557352 (Phone)

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