Stockpiling at the Onset of the COVID-19 Pandemic: An Empirical Analysis of National Prescription Drug Sales and Prices

Management Science, Forthcoming

66 Pages Posted: 21 Dec 2021 Last revised: 12 Sep 2023

See all articles by Minje Park

Minje Park

Columbia University - Columbia Business School, Decision Risk and Operations

Anita Carson

Larz Anderson Professor of Management

Erin Fox

University of Utah Health

Rena Conti

Boston University - Markets, Public Policy, and Law

Date Written: September 11, 2023

Abstract

At the onset of the coronavirus (COVID-19) pandemic, hospitals experienced a demand surge for COVID-19-related medical care while simultaneously struggling to source prescription drugs needed to manage COVID-19 patients. This is worrisome as shortfalls in the supply of essential drugs can negatively impact patient outcomes. The popular press reporting on these challenges suggests that they are caused by supply chain disruptions. However, rigorous research on the relationship between the pandemic and prescription drug supply is limited. To address this gap, we leverage a quasi-experimental design and IQVIA’s National Sales Perspectives™ data from 2018-2020. We focus on prescription drugs indicated for the management of COVID-19 patients and a set of control drugs (i.e., drugs not used for COVID-19). We find that in the early phases of the pandemic, hospitals stockpiled prescription drugs indicated for the management of COVID-19, making this behavior an under-recognized cause of the sourcing challenges. The sales volume
of drugs indicated for COVID-19 management was concentrated in the first two months of the pandemic, after which sales decreased significantly despite a nationwide increase in COVID-19-related hospitalizations. We investigate another potential cause of stockpiling: expected price increases. Counter to concerns of price gouging, we find little evidence of price inflation for these drugs. An implication for drug manufacturers is that orders due to stockpiling by downstream buyers early on in a pandemic may need to be discounted when predicting future demand. Our results have implications for drug suppliers, hospitals, and policymakers interested in improving medical product supply chain resilience.

Keywords: stockpiling, drug shortages, price, COVID-19, difference-in-differences

Suggested Citation

Park, Minje and Carson, Anita and Fox, Erin and Conti, Rena, Stockpiling at the Onset of the COVID-19 Pandemic: An Empirical Analysis of National Prescription Drug Sales and Prices (September 11, 2023). Management Science, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3988183 or http://dx.doi.org/10.2139/ssrn.3988183

Minje Park (Contact Author)

Columbia University - Columbia Business School, Decision Risk and Operations ( email )

New York, NY
United States

Anita Carson

Larz Anderson Professor of Management ( email )

United States

Erin Fox

University of Utah Health ( email )

Salt Lake City, UT
United States
8015873621 (Phone)

Rena Conti

Boston University - Markets, Public Policy, and Law ( email )

Boston, MA
United States

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