“Insurance Design and the Passthrough of Nominal Drug Prices”(with Josh Feng)

When plans must provide a minimum level of coverage, sponsors have an incentive to use list prices and rebates to circumvent coverage restrictions and increase patient cost-sharing. Using exposure to the Medicaid market as an instrument, we confirm that higher list prices lead to higher patient out-of-pocket costs. Passthrough is lowest in PPO and HMO commercial plans and highest in HDHPs and Medicare Part D plans.

“Stocking Under the Influence: Spillovers from Commercial Drug Coverage to Medicare Utilization”(with Emma B. Dean and Josh Feng) Revisions requested at American Economic Review

We argue that drug coverage in commercial insurance can affect utilization in Medicare Part B. Leveraging state-level variation in the adoption of national formularies as an IV, we show that higher exclusion rates in commercial formularies are causally linked to lower Part B utilization. Prescribing patterns of physicians operating across multiple facilities show that the effect is not driven by physician preferences but by facility stocking behavior.

“Mergers that Matter: The Impact of M&A Activity in Prescription Drug Markets”(with Josh Feng, Thomas Hwang, and Yunjuan Liu)

We build a novel dataset tracking acquisitions of branded drugs. Horizontal acquisitions that escape regulatory scrutiny are followed by large price increases. Cross-market acquisitions that do not involve directly competing drugs do not have a detectable effect on prices.

Media coverage: Chicago Booth Review
Associated documents: public comment on proposed changes to the premerger notification program

“Biosimilar Entry and the Pricing of Biologic Drugs”(with Josh Feng, Thomas Hwang, and Jacob Klimek) Revisions requested at Review of Industrial Organization

We show that originator biologics respond to biosimilar entry by reducing net-of-rebate prices to maintain volume, in contrast to the well-documented response of small-molecule drugs to generic entry, and provide suggestive evidence that perceived differences drive the strategic response.