When Discounts Raise Costs: The Effect of Copay Coupons on Generic Utilization by Leemore Dafny, Christopher J. Ody, Matthew Schmitt :: SSRN

Branded pharmaceutical manufacturers frequently offer “copay coupons'” that insulate consumers from cost-sharing, thereby undermining insurers’ ability to influence drug utilization. We study the impact of copay coupons on branded drugs first facing generic entry between 2007 and 2010. To overcome endogeneity concerns, we exploit cross-state and cross-consumer variation in coupon legality. We find that coupons increase branded sales by 60+ percent, entirely by reducing the sales of bioequivalent generics. During the five years following generic entry, we estimate that coupons increase total spending by $30 to $120 million per drug, or $700 million to $2.7 billion for our sample alone.

Source: When Discounts Raise Costs: The Effect of Copay Coupons on Generic Utilization by Leemore Dafny, Christopher J. Ody, Matthew Schmitt :: SSRN

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s