RAND Roybal Center for Health Policy Simulation

Prescription drugs and Medicare Part D

Welfare Analysis of Medicare Part D (Neeraj Sood)

This project will evaluate the welfare effects of the Medicare Part D benefit. It will consider effects on welfare due to increased use of drugs by the elderly and also the effects of on innovation due to higher industry profits. We will also examine how other features of part D such as price negotiations and limits on patent gaming affect social welfare.

The Value of Pharmaceutical Innovations for the Elderly: The Case of Antidepressants (Pinar Karaca-Mandic)

Most studies aimed at assessing the value of innovations in pharmaceuticals have focused on the impact of new drugs on survival rates, medical expenditures and health status. Another, and possibly more direct, approach to understanding the value of innovation is to ask "How much additional consumer surplus and producer surplus are generated by the innovation?" This application pilot study will follow the latter approach to assess the value of the innovations in the antidepressant market for the elderly who are more susceptible to depression. We will use patient-level data that includes individual specific health indicators to captures patient heterogeneity. Moreover, we will focus on producer surplus as well as patient surplus from innovations.

The Economic Impact of Pharmacogenetics (Daniella Meeker)

Personalized medicine, or pharmacogenomics, promises the ability to tailor drug therapies to individuals based on prior knowledge of their biological traits. This area of biomedical research is of particular interest in the case of aging individuals that are likely to have multiple prescriptions with individually variant side-effects and efficacies. From an economic perspective, the effect of implementing pharmacogenomics in general will be to change pharmaceuticals from “experience” goods, whose value is known to the consumer only after a period of consumption, to “inspection” goods, whose value is known to the consumer prior to consumption. By diminishing the need to try a drug in order to determine its effectiveness, pharmacogenomics would drastically reduce or even eliminate costs associated with ineffective or even harmful therapies. This study considers how changes in current clinical practice to include extant pharmacogenetics knowledge could impact drug expenditures.