PRICE DISCRIMINATION IN THE US CANCER DRUG MARKET
Embargo until
Date
2017-04-07
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Johns Hopkins University
Abstract
The thesis has five chapters. Chapter 1 introduces the issue. Chapter 2 discusses the concept of price discrimination, conducts a literature review, and presents a conceptual model. The literature review identified 106 articles relevant to price discrimination in the US cancer drug market. These provides the basis of a conceptual model depicting key actors and associations with price discrimination in the US cancer drug market.
Chapter 3 analyzes the evidence of price discrimination and examines demand factors suggested in Chapter 2. Using theory on price discrimination in markets with imperfect competition, price dispersion is examined in single and multi-source cancer drugs in US markets. The primary data is a large commercial claims database covering years 2010-2014. In the single source market, smaller discounts (14.7% versus 60%) and smaller levels of dispersion (5.6% versus 43%) are observed relative to the multi-source market, suggesting evidence of price discrimination. Multivariate analysis found some demand factors such as health plan and age are associated with price discrimination. Health plan type is minimally associated with price discounts. No evidence exists for type 2 price discrimination.
Chapter 4 quantifies pricing trends and assesses the impact of price discrimination in the US cancer drug market using same data from Chapter 3. For single source drugs, Average Wholesale Prices increased 76%, transaction prices increased 74%, and patient cost-sharing increased 29% from 2010-2014. The gap between the 10th and 90th percentile paid for single source drugs increased from $183 to $474. Plans with capitation and non-capitated plans experienced price increases of grew 4.3% and 5.7%, respectively. Multivariate analysis suggest a 10% increase in price dispersion is associated with a utilization increase of 1.1% in single source drugs. Each additional manufacturer is associated with a 15.5% increase in utilization.
The thesis found evidence for price discrimination in the US cancer drug market. There was evidence supporting some of the associations depicted in the conceptual model, notably the association of health plan type and price discrimination; other associations had no evidence. Results suggest a growing trend in prices and price discrimination increases access, albeit as a small effect.
Description
Keywords
Health Economics, Drug Pricing, Pharmaceutical Pricing, Health Policy, Price Discrimination