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Research Details

Insurance Access and Demand Response: Pricing and Welfare Implications

Abstract

We show that insurance coverage for prescription drugs can relax liquidity constraints, thereby permitting innovators to extract a large percentage of the value that their products create. As a result, consumers may be worse off with insurance, even in the absence of moral hazard. We show that this problem is exacerbated in a fragmented market and when regulations require the coupling of drug coverage with other medical coverage.

Type

Working Paper

Author(s)

David Dranove, Craig Garthwaite, David Besanko

Date Published

2017

Citations

Dranove, David, Craig Garthwaite, and David Besanko. 2017. Insurance Access and Demand Response: Pricing and Welfare Implications.

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