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1 – 10 of over 2000With expenditures totaling $227 billion in 2007, prescription drug purchases are a growing portion of the total medical expenditure, and as this industry continues to grow…
Abstract
With expenditures totaling $227 billion in 2007, prescription drug purchases are a growing portion of the total medical expenditure, and as this industry continues to grow, prescription drugs will continue to be a critical part of the larger health care industry. This chapter presents a survey on the economics of the US pharmaceutical industry, with a focus on the role of R&D and marketing, the determinants (and complications) of prescription drug pricing, and various aspects of consumer behavior specific to this industry, such as prescription drug regulation, the patient's interaction with the physician, and insurance coverage. This chapter also provides background in areas not often considered in the economics literature, such as the role of pharmacy benefit managers in prescription drug prices and the differentiation between alternative measures of prescription drug prices.
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- Abbreviated New Drug Application (ANDA)
- Average Manufacturer Price (AMP)
- Average Wholesale Price (AWP)
- Bayh-Dole Act
- Bioequivalence
- Brand name drug
- Center for Medicare and Medicaid Services (CMS)
- Chain pharmacy
- Clinical trials
- Closed formulary
- Coinsurance
- Compliance
- Co-payment
- Cost controls
- Cost sharing
- Detailing
- Direct-to-consumer Advertising (DTC Advertising)
- Disease management
- Drug manufacturers
- Drug prices
- Drug–product substitution
- Experience goods
- Fee-for-service (FFS)
- First-mover advantage
- Food and Drug Administration (FDA)
- Formulary
- Generic drug
- Good Manufacturing Processes (GMP)
- Hatch-Waxman Act
- Health plan
- Insurance
- Investigational New Drug Application (IND)
- Mail-order pharmacy
- Mail-order prescription drugs
- Medicaid
- Medicare
- Medicare+Choice (M+C)
- Medicare Advantage
- Medicare Modernization Act (MMA)
- Medicare Part D
- Moral hazard
- Negative goods
- New Drug Application (NDA)
- Non-retail pharmacy
- Original Medicare
- Out-of-pocket
- Paid search advertising
- Patent
- Patient
- Pharmaceutical
- Pharmacy
- Pharmacy benefit manager (PBM)
- Physician
- Prescription drugs
- Product differentiation
- Rebate
- Reimbursement
- Research and development (R&D)
- Retail pharmacy
- Search costs
- Switching costs
- Therapeutic class
- Third-party insurance
- Tiered formulary
- Wholesale Acquisition Price (WAC)
- Wholesaler
Barry M. Mitnick and Martin Lewison
Despite the existence of a variety of approaches to the understanding of behavioral and managerial ethics in organizations and business relationships generally, knowledge of…
Abstract
Despite the existence of a variety of approaches to the understanding of behavioral and managerial ethics in organizations and business relationships generally, knowledge of organizing systems for fidelity remains in its infancy. We use halakha, or Jewish law, as a model, together with the literature in sociology, economic anthropology, and economics on what it termed “middleman minorities,” and on what we have termed the Landa Problem, the problem of identifying a trustworthy economic exchange partner, to explore this issue.
The article contrasts the differing explanations for trustworthy behavior in these literatures, focusing on the widely referenced work of Avner Greif on the Jewish Maghribi merchants of the eleventh century. We challenge Greif’s argument that cheating among the Magribi was managed chiefly via a rational, self-interested reputational sanctioning system in the closed group of traders. Greif largely ignores a more compelling if potentially complementary argument, which we believe also finds support among the documentary evidence of the Cairo Geniza as reported by Goitein: that the behavior of the Maghribi reflected their deep beliefs and commitment to Jewish law, halakha.
Applying insights from this analysis, we present an explicit theory of heroic marginality, the production of extreme precautionary behaviors to ensure service to the principal.
Generalizing from the case of halakha, the article proposes the construct of a deep code, identifying five defining characteristics of such a code, and suggests that deep codes may act as facilitators of compliance. We also offer speculation on design features employing deep codes that may increase the likelihood of production of behaviors consistent with terminal values of the community.
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The conceptual framework of institutions proposed here is not entirely new. While it shares common features with the early institutionalists’ frameworks, it also introduces some…
Abstract
The conceptual framework of institutions proposed here is not entirely new. While it shares common features with the early institutionalists’ frameworks, it also introduces some original insights. What is new is that this framework identifies the key components of institutions and approaches as an open organic system with complex dynamics among its components rather than a static mechanism operating in a vacuum. The two additional models presented in the next section will help us better understand how these components of institutions are linked, how they interact, and how institutions are enforced. The framework brings together and builds on empirical evidence and theoretical scholarship from the different disciplines discussed in the previous and current chapters.
Teresa Bernard Gibson, Catherine G. McLaughlin and Dean G. Smith
Purpose – The purpose of this study is to estimate the own- and cross-price elasticity of brand-name outpatient prescription drug cost-sharing for maintenance medications and to…
Abstract
Purpose – The purpose of this study is to estimate the own- and cross-price elasticity of brand-name outpatient prescription drug cost-sharing for maintenance medications and to estimate the effects of changes in the price differential between generic and brand-name prescription drugs.
Methodology/approach – We first review the literature on the effects of an increase in brand-name drug patient cost-sharing. In addition, we analyze two examples of utilization patterns in filling behavior associated with an increase in brand-name cost-sharing for patients in employer-sponsored health plans with chronic illness.
Findings – We found that the own-price elasticity of demand for brand-name prescription drugs was inelastic. However, the cross-price elasticity was not consistent in sign, and utilization patterns for generic prescription fills did not always increase after a rise in brand-name cost-sharing.
Research limitations – The empirical examples are limited to the experience of patients with employer-sponsored health insurance.
Practical implications – The common practice of increasing brand-name prescription drug patient cost-sharing to increase consumption of generic drugs may not always result in higher generic medication use. Higher brand-name drug cost-sharing levels may result in discontinuation of chronic therapies, instead of therapeutic switching.
Originality/value of chapter – The value of this chapter is its singular focus on the effects of higher brand-name drug cost-sharing through a synthesis of the literature examining the own- and cross-price elasticity of demand for brand-name medications and two empirical examples of the effects of changes in brand-name cost-sharing.
Lieke H.H.M. Boonen, Stéphanie A. van der Geest, Frederik T. Schut and Marco Varkevisser
Purpose – To analyse the development of pharmaceutical policy in the Dutch market for outpatient prescription drugs since the early 1990s.Methodology – A literature review and…
Abstract
Purpose – To analyse the development of pharmaceutical policy in the Dutch market for outpatient prescription drugs since the early 1990s.
Methodology – A literature review and document analysis is performed to examine the effects of pharmaceutical policy on the performance of the Dutch market for outpatient prescription drugs since the early 1990s.
Findings – Government efforts to control prices of pharmaceuticals were effective in constraining prices of in-patent drugs, but had an opposite effect on the prices of generic drugs. The gradual transition towards managed competition – that particularly gained momentum after the introduction of the new universal health insurance scheme in 2006 – appears to be more effective in constraining prices of generic drugs than earlier government efforts to control these prices.
Originality – Comparative analysis of the impact of price regulation and managed competition on generic drug prices in the Netherlands.
Implications – Implications of the changing role of health insurers are discussed for the future market for prescription drugs and role of pharmacies in the Netherlands.
Shin-Yi Chou, Mary E. Deily, Hsien-Ming Lien and Jing Hua Zhang
Purpose – This chapter examines how drug prescribing behavior in Taiwanese hospitals changed after the government changed reimbursement systems. In 2002, Taiwan instituted a…
Abstract
Purpose – This chapter examines how drug prescribing behavior in Taiwanese hospitals changed after the government changed reimbursement systems. In 2002, Taiwan instituted a system in which hospitals are reimbursed for drug expenditures at full price from a fixed global budget before the remaining budget is allocated to reimburse all other expenditures, often at discounted prices. Providers are thus given a financial incentive to increase prescriptions.
Methodology – We isolate the effect of this system from that of other confounding factors by estimating a difference-in-difference model to analyze monthly drug expenditures of hospital departments for outpatients during the years 1999–2006.
Findings – Our results suggest that hospital departments which use drugs more heavily as part of their regular medical care increased their drug prescription expenditures after the implementation of the global budget system. In addition, we find that the response was stronger among for-profit than not-for-profit and public hospitals.
Implications – Hospital doctors responded to the financial incentive created by the particular global budgeting system adopted in Taiwan by increasing expenditures on drug treatments for outpatients.
Behnud Mir Djawadi, Sabrina Plaß and Sabrina Schäfers
When reporting wrongdoing internally, whistleblowers are confronted with the dilemma of weighing up their loyalty toward the organization (e.g., ethical standards) and their…
Abstract
When reporting wrongdoing internally, whistleblowers are confronted with the dilemma of weighing up their loyalty toward the organization (e.g., ethical standards) and their co-workers (e.g., the social norm of not snitching on peers). However, the role played by peers in the whistleblowing decision process and in the aftermath has rarely been addressed in existing reviews. We therefore perform a systematic review that identifies seven thematic clusters of peer factors, offering researchers an informative overview of (a) the peer factors that have been examined to influence the whistleblowing decision, and (b) the extent to which the whistleblower experiences adverse consequences from peers in the aftermath of whistleblowing. As peer factors seem to be important to explain and predict internal whistleblowing, researchers are encouraged to address in future works the research gaps our review unraveled.
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Charles R. Taylor, Michael L. Capella and John C. Kozup
The impact of DTC advertising of prescription drugs on consumers has been the subject of considerable debate worldwide. Proponents of DTC advertising argue that it allows patients…
Abstract
The impact of DTC advertising of prescription drugs on consumers has been the subject of considerable debate worldwide. Proponents of DTC advertising argue that it allows patients to make more informed decisions, helps address under-treatment of some medical conditions, and improves the economic value of health care, among other benefits. In contrast, critics of DTC advertising contend that it leads to consumers paying higher prices, patients potentially being misled about risks and benefits of drugs, and patients pressuring doctors to prescribe drugs. The authors examine this debate in the context of two leading theories on the effects of advertising – the Advertising=Information and Advertising=Market power schools of thought and review empirical studies that have examined the impacts of DTC advertising on consumers. It is found that the research evidence generally favors the Advertising=Information school, which is supportive of the idea that DTC helps patients become more informed and communicate more effectively with their doctors.
Sun-Ki Chai, Dolgorsuren Dorj and Katerina Sherstyuk
Culture is a central concept broadly studied in social anthropology and sociology. It has been gaining increasing attention in economics, appearing in research on labor market…
Abstract
Culture is a central concept broadly studied in social anthropology and sociology. It has been gaining increasing attention in economics, appearing in research on labor market discrimination, identity, gender, and social preferences. Most experimental economics research on culture studies cross-national or cross-ethnic differences in economic behavior. In contrast, we explain laboratory behavior using two cultural dimensions adopted from a prominent general cultural framework in contemporary social anthropology: group commitment and grid control. Groupness measures the extent to which individual identity is incorporated into group or collective identity; gridness measures the extent to which social and political prescriptions intrinsically influence individual behavior. Grid-group characteristics are measured for each individual using selected items from the World Values Survey. We hypothesize that these attributes allow us to systematically predict behavior in a way that discriminates among multiple forms of social preferences using a simple, parsimonious deductive model. The theoretical predictions are further tested in the economics laboratory by applying them to the dictator, ultimatum, and trust games. We find that these predictions are confirmed overall for most experimental games, although the strength of empirical support varies across games. We conclude that grid-group cultural theory is a viable predictor of people’s economic behavior, then discuss potential limitations of the current approach and ways to improve it.
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Filip Lievens, Robert P. Tett and Deidra J. Schleicher
Exercises are key components of assessment centers (ACs). However, little is known about the nature and determinants of AC exercise performance. The traditional exercise paradigm…
Abstract
Exercises are key components of assessment centers (ACs). However, little is known about the nature and determinants of AC exercise performance. The traditional exercise paradigm primarily emphasizes the need to simulate task, social, and organizational demands in AC exercises. This chapter draws on trait activation theory in proposing a new AC exercise paradigm. First, we develop a theoretical framework that addresses the complexity of situational characteristics of AC exercises as determinants of AC performance. Second, we argue for planting multiple stimuli within exercises as a structured means of eliciting candidate behavior. Third, we show how the new paradigm also has key insights for the rating part of ACs, namely, in selecting dimensions, designing behavioral checklists, screening assessors, and training assessors. Finally, the impact of this new AC exercise paradigm is anticipated on important AC outcomes such as reliability, internal/external construct-related validity, criterion-related validity, assessee perceptions, and feedback effectiveness.