The Medium-Term Impact of Medicare Part D on Pharmaceutical Prices

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Health Care Management Papers
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Health and Medical Administration
Insurance
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Duggan, Mark
Morton, Fiona S
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Medicare Part D began coverage of prescription drugs in 2006. Using data from the first year of the program we found that Part D reduced pharmaceutical prices for Medicare recipients, with these effects driven by enrollees previously without drug coverage. In this paper we extend our analysis through 2009, the fourth year of the program, to investigate whether plans continued to extract price concessions in return for favorable formulary placement, or if consumer inertia or other factors caused prices to bounce back after their initial decline. We find price declines persisted through at least the third year of the program.

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2011-05-01
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American Economic Review
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