Cover: The Demand for Prescription Drugs as a Function of Cost-Sharing

The Demand for Prescription Drugs as a Function of Cost-Sharing

Published 1985

by Arleen Leibowitz, Willard G. Manning, Joseph P. Newhouse

Download eBook for Free

FormatFile SizeNotes
PDF file 1 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

This Note estimates how the use of drugs varies when insurance plans alter the coinsurance rate of drugs and other medical services. Data for the analysis are derived from the RAND Health Insurance Experiment, a randomized trial designed to determine the effect of cost-sharing on the demand for health services and on the health status of individuals. Participants in the experiment were randomly assigned to insurance plans with varying coinsurance rates and deductibles. Data from four sites are used to estimate how drug expenditures vary by insurance plan. Findings show that individuals with generous insurance buy more drugs. The percentage reduction in use caused by cost-sharing was similar for drugs and other medical care use. Reduced numbers and prescriptions purchased, rather than lower cost prescriptions or use of generic drugs, accounted for most of the effect.

This report is part of the RAND note series. The note was a product of RAND from 1979 to 1993 that reported other outputs of sponsored research for general distribution.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.