Essays on the Health Economics of Pharmaceuticals

The effects of pharmaceutical treatment on patient health, pricing of pharmaceuticals and their regulation are the backbone of my research. My work reflects two current trends used to advance our knowledge in the field: the use of dynamic structural models that is supplemented by detailed administrative individual-level data. This thesis consists of three chapters that address a number of policy-relevant questions in health economics using both individual- and market-level outcomes. In the first chapter I take a market-level approach to look at the effect of mergers between insurance companies on Medicare Part D plan premiums and generosity of coverage. In the following two chapters I study the effects of ADHD treatment on children\u27s health and behavioral outcomes

The Impact of Horizontal Mergers on Plan Premiums and Drug Formularies in Medicare Part D

In this paper, we examine the impact of horizontal mergers amongst insurers on competition in the Medicare Part D prescription drug market. Theory predictions about the effect of mergers on price and product quality are confounded by three competing forces: increased cost efficiency, market power, and bargaining power with upstream suppliers. Using panel data for the full set of plans offered by Part D insurers between 2006-2012, we use a differences-in-differences identification strategy to document the effect that merger activity has on plan pricing and drug coverage characteristics. We find that plans affected by a merger experience higher premiums as a result of increased market power. However, for merging insurers that restructure their plan offerings, price falls to offset the market power effect. The results on drug formulary measures show that merging on its own has no effect on the generosity of drug coverage. Yet for restructured plans, there are sizable merger effects on coverage in the form of reduced copay/coinsurance rates and increased scope in the set of covered drugs. The lowered prices and improved drug coverage for restructured plans suggest cost efficiencies and bargaining power with drug suppliers are a major source of gains stemming from mergers

Association of body mass index in midlife with morbidity burden in older adulthood and longevity

Importance: Abundant evidence links obesity with adverse health consequences. However, controversies persist regarding whether overweight status compared with normal body mass index (BMI; calculated as weight in kilograms divided by height in meters squared) is associated with longer survival and whether this occurs at the expense of greater long-term morbidity and health care expenditures. Objective: To examine the association of BMI in midlife with morbidity burden, longevity, and health care expenditures in adults 65 years and older. Design, Setting, and Participants: Prospective cohort study at the Chicago Heart Association Detection Project in Industry, with baseline in-person examination between November 1967 and January 1973 linked with Medicare follow-up between January 1985 and December 2015. Participants included 29 621 adults who were at least age 65 years in follow-up and enrolled in Medicare. Data were analyzed from January 2020 to December 2021. Exposures: Standard BMI categories. Main Outcomes and Measures: (1) Morbidity burden at 65 years and older assessed with the Gagne combined comorbidity score (ranging from -2 to 26, with higher score associated with higher mortality), which is a well-validated index based on International Classification of Diseases, Ninth Revision codes for use in administrative data sets; (2) longevity (age at death); and (3) health care costs based on Medicare linkage in older adulthood (aged ≥65 years). Results: Among 29 621 participants, mean (SD) age was 40 (12) years, 57.1% were men, and 9.1% were Black; 46.0% had normal BMI, 39.6% were overweight, and 11.9% had classes I and II obesity at baseline. Higher cumulative morbidity burden in older adulthood was observed among those who were overweight (7.22 morbidity-years) and those with classes I and II obesity (9.80) compared with those with a normal BMI (6.10) in midlife (P \u3c .001). Mean age at death was similar between those who were overweight (82.1 years [95% CI, 81.9-82.2 years]) and those who had normal BMI (82.3 years [95% CI, 82.1-82.5 years]) but shorter in those who with classes I and II obesity (80.8 years [95% CI, 80.5-81.1 years]). The proportion (SE) of life-years lived in older adulthood with Gagne score of at least 1 was 0.38% (0.00%) in those with a normal BMI, 0.41% (0.00%) in those with overweight, and 0.43% (0.01%) in those with classes I and II obesity. Cumulative median per-person health care costs in older adulthood were significantly higher among overweight participants ($12 390 [95$10 427 to $14 354]) and those with classes I and II obesity ($23 396 [95% CI, $18 474 to$28 319]) participants compared with those with a normal BMI (P \u3c .001). Conclusions and Relevance: In this cohort study, overweight in midlife, compared with normal BMI, was associated with higher cumulative burden of morbidity and greater proportion of life lived with morbidity in the context of similar longevity. These findings translated to higher total health care expenditures in older adulthood for those who were overweight in midlife

Increasing prevalence of cirrhosis among insured adults in the United States, 2012–2018

Background Liver cirrhosis is a chronic disease that is known as a “silent killer” and its true prevalence is difficult to describe. It is imperative to accurately characterize the prevalence of cirrhosis because of its increasing healthcare burden. Methods In this retrospective cohort study, trends in cirrhosis prevalence were evaluated using administrative data from one of the largest national health insurance providers in the US. (2011–2018). Enrolled adult (≥18-years-old) patients with cirrhosis defined by ICD-9 and ICD-10 were included in the study. The primary outcome measured in the study was the prevalence of cirrhosis 2011–2018. Results Among the 371,482 patients with cirrhosis, the mean age was 62.2 (±13.7) years; 53.3% had commercial insurance and 46.4% had Medicare Advantage. The most frequent cirrhosis etiologies were alcohol-related (26.0%), NASH (20.9%) and HCV (20.0%). Mean time of follow-up was 725 (±732.3) days. The observed cirrhosis prevalence was 0.71% in 2018, a 2-fold increase from 2012 (0.34%). The highest prevalence observed was among patients with Medicare Advantage insurance (1.67%) in 2018. Prevalence increased in each US. state, with Southern states having the most rapid rise (2.3-fold). The most significant increases were observed in patients with NASH (3.9-fold) and alcohol-related (2-fold) cirrhosis. Conclusion Between 2012–2018, the prevalence of liver cirrhosis doubled among insured patients. Alcohol-related and NASH cirrhosis were the most significant contributors to this increase. Patients living in the South, and those insured by Medicare Advantage also have disproportionately higher prevalence of cirrhosis. Public health interventions are important to mitigate this concerning trajectory of strain to the health system

Does Prenatal WIC Participation Improve Child Outcomes?

A large body of literature documents positive effects of the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) on birth outcomes, and separately connects health at birth and future outcomes. But little research investigates the link between prenatal WIC participation and childhood outcomes. We explore this question using a unique data set from South Carolina that links administrative birth, Medicaid, and education records. We find that relative to their siblings, prenatal WIC participants have a lower incidence of ADHD (attention-deficit/hyperactivity disorder) and other common childhood mental health conditions and a lower incidence of grade repetition. These findings demonstrate that a “WIC start” results in persistent improvements in child outcomes across a range of domains

Regulatory review time and pharmaceutical research and development

In the United States, all newly developed drugs undergo a lengthy reviewprocess conducted by the US Food and Drug Administration (FDA). Theseregulatory delays have direct immediate costs for drug manufacturers andpatients waiting for treatment. Under certain market conditions, regulatorydelays may also affect future research and development (R&D) strategies ofpharmaceutical companies. To estimate the magnitude of this effect, we matchdata on drugs in the development pipeline in 2006 to data that we collect onFDA review times for all drugs approved between 1999 and 2005. Employing arich and novel set of controls that affect drug R&D decisions and, potentially,regulatory review lags, we find that on average, three additional months ofdelay result in one fewer drug in development in that drug category. Ourresults suggest that the length of the regulatory delay matters for pharmaceuticalfirms\u27 R&D decisions and that the firms are likely unable to pass onthese costs onto consumers