Department of Economics and Business Economics

Marianne Simonsen

Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design

Research output: ResearchWorking paper

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Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design. / Simonsen, Marianne; Skipper, Lars; Skipper, Niels.

Aarhus : Institut for Økonomi, Aarhus Universitet, 2010.

Research output: ResearchWorking paper

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@techreport{d02a2b1001bf11dfb95d000ea68e967b,
title = "Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design",
abstract = "This paper investigates price sensitivity of demand for prescription drugs using drug purchaserecords for at 20% random sample of the Danish population. We identify price responsiveness byexploiting exogenous variation in prices caused by kinked reimbursement schemes and implement aregression kink design. Thus, within a unifying framework we uncover price sensitivity for differentsubpopulations and types of drugs. The results suggest low average price responsiveness withcorresponding price elasticities ranging from -0.08 to -0.25, implying that demand is inelastic.Individuals with lower education and income are, however, more responsive to the price. Also,essential drugs that prevent deterioration in health and prolong life have lower associated averageprice sensitivity.",
keywords = "Prescription drugs, price, reimbursement schemes, regression kink design",
author = "Marianne Simonsen and Lars Skipper and Niels Skipper",
year = "2010",
publisher = "Institut for Økonomi, Aarhus Universitet",
type = "WorkingPaper",
institution = "Institut for Økonomi, Aarhus Universitet",

}

RIS

TY - UNPB

T1 - Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design

AU - Simonsen,Marianne

AU - Skipper,Lars

AU - Skipper,Niels

PY - 2010

Y1 - 2010

N2 - This paper investigates price sensitivity of demand for prescription drugs using drug purchaserecords for at 20% random sample of the Danish population. We identify price responsiveness byexploiting exogenous variation in prices caused by kinked reimbursement schemes and implement aregression kink design. Thus, within a unifying framework we uncover price sensitivity for differentsubpopulations and types of drugs. The results suggest low average price responsiveness withcorresponding price elasticities ranging from -0.08 to -0.25, implying that demand is inelastic.Individuals with lower education and income are, however, more responsive to the price. Also,essential drugs that prevent deterioration in health and prolong life have lower associated averageprice sensitivity.

AB - This paper investigates price sensitivity of demand for prescription drugs using drug purchaserecords for at 20% random sample of the Danish population. We identify price responsiveness byexploiting exogenous variation in prices caused by kinked reimbursement schemes and implement aregression kink design. Thus, within a unifying framework we uncover price sensitivity for differentsubpopulations and types of drugs. The results suggest low average price responsiveness withcorresponding price elasticities ranging from -0.08 to -0.25, implying that demand is inelastic.Individuals with lower education and income are, however, more responsive to the price. Also,essential drugs that prevent deterioration in health and prolong life have lower associated averageprice sensitivity.

KW - Prescription drugs, price, reimbursement schemes, regression kink design

M3 - Working paper

BT - Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design

PB - Institut for Økonomi, Aarhus Universitet

ER -