Reference Pricing of Pharmaceuticals for Medicare: Evidence from Germany, the Netherlands and New Zealand

This paper describes three prototypical systems of therapeutic reference pricing (RP) for pharmaceuticals -- Germany, the Netherlands, and New Zealand -- and examines their effects on the availability of new drugs, reimbursement levels, manufacturer prices and out-of-pocket surcharges to patients. RP for pharmaceuticals is not simply analogous to a defined contribution approach to subsidizing insurance coverage. Although a major purpose of RP is to stimulate competition, theory suggests that this is unlikely and this is confirmed by the empirical evidence. Other effects of RP differ across countries in predictable ways, reflecting each country's system design and other cost control policies. New Zealand's RP system has reduced reimbursement and limited the availability of new drugs, particularly more expensive drugs. Compared to these three countries, if RP were applied in the US, it would likely have a more negative effect on prices of on-patent products, due to the more competitive US generic market, and a more negative effect on R&D and on the future supply of new drugs, due to the much larger US share of global pharmaceutical sales.

Reference Pricing of Pharmaceuticals for Medicare: Evidence From Germany, the Netherlands, and New Zealand

This paper describes three prototypical systems of therapeutic reference pricing (RP) for pharmaceuticals—Germany, the Netherlands, and New Zealand—and examines their effects on the availability of new drugs, reimbursement levels, manufacturer prices, and out-of-pocket sur-charges to patients. RP for pharmaceuticals is not simply analogous to a defined contribution approach to subsidizing insurance coverage. Although a major purpose of RPis to stimulate competition, theory suggests that the achievement of this goal is unlikely, and this is confirmed by the empirical evidence. Other effects of RPdiffer across countries in predictable ways, reflecting each country’s system design and other cost-control policies. New Zealand’s RPsystem has reduced reimbursement and limited the availability of new drugs, particularly more expensive drugs. Compared to these three countries, if RP were applied in the United States, it would likely have a more negative effect on prices of on-patent products because of the more competitive U.S. generic market, and on research and development (R&D) and the future supply of new drugs, because of the much larger U.S. share of global pharmaceutical sales

Professional Partnerships and Matching in Obstetrics

Theory indicates that internally-differentiated professional partnerships can promote matching between heterogeneous consumers and professionals, particularly when consumers have imperfect information or markets have barriers to referrals between firms. We test this in obstetrics markets, relying on random assignment of patients to physicians to generate unbiased measures of a physician's treatment style and skill, and on simulations to measure a physician's specialization. Consumers match to professionals along all three dimensions -- specialization, style and skill -- based on consumers' observed characteristics and unobserved preferences. We conclude that internally-differentiated partnerships promote matching in ways that improve consumers' welfare and health.

Sediment structure and physicochemical changes following tidal inundation at a large open coast managed realignment site

Managed realignment (MR) schemes are being implemented to compensate for the loss of intertidal saltmarsh habitats by breaching flood defences and inundating the formerly defended coastal hinterland. However, studies have shown that MR sites have lower biodiversity than anticipated, which has been linked with anoxia and poor drainage resulting from compaction and the collapse of sediment pore space caused by the site's former terrestrial land use. Despite this proposed link between biodiversity and soil structure, the evolution of the sediment sub-surface following site inundation has rarely been examined, particularly over the early stages of the terrestrial to marine or estuarine transition. This paper presents a novel combination of broad- and intensive-scale analysis of the sub-surface evolution of the Medmerry Managed Realignment Site (West Sussex, UK) in the three years following site inundation. Repeated broad-scale sediment physiochemical datasets are analysed to assess the early changes in the sediment subsurface and the preservation of the former terrestrial surface, comparing four locations of different former land uses. Additionally, for two of these locations, high-intensity 3D-computed X-ray microtomography and Itrax micro-X-ray fluorescence spectrometry analyses are presented. Results provide new data on differences in sediment properties and structure related to the former land use, indicating that increased agricultural activity leads to increased compaction and reduced porosity. The presence of anoxic conditions, indicative of poor hydrological connectivity between the terrestrial and post-inundation intertidal sediment facies, was only detected at one site. This site has experienced the highest rate of accretion over the terrestrial surface (ca. 7 cm over 36 months), suggesting that poor drainage is caused by the interaction (or lack of) between sediment facies rather than the former land use. This has significant implications for the design of future MR sites in terms of preparing sites, their anticipated evolution, and the delivery of ecosystem services

Development of novel 2D and 3D correlative microscopy to characterise the composition and multiscale structure of suspended sediment aggregates.

Suspended cohesive sediments form aggregates or 'flocs' and are often closely associated with carbo, nutrients, pathogens and pollutants, which makes understanding their composition, transport and fate highly desirable. Accurate prediction of floc behaviour requires the quantification of 3-dimensional (3D) properties (size, shoe and internal structure) that span several scales (i.e. nanometre [nm] to millimetre [mm]-scale). Traditional techniques (optical cameras and electron microscopy [EM]), however, can only provide 2-dimensional (2D) simplifications of 3D floc geometries. Additionally, the existence of a resolution gap between conventional optical microscopy (COM) and transmission EM (TEM) prevents an understanding of how floc nm-scale constituents and internal structure influence mm-scale floc properties. Here, we develop a novel correlative imaging workflow combining 3D X-ray micro-computed tomography (μCT), 3D focused ion beam nanotomography (FIB-nt) and 2D scanning EM (SEM) and TEM (STEM) which allows us to stabilise, visualise and quantify the composition and multi scale structure of sediment flocs for the first time. This new technique allowed the quantification of 3D floc geometries, the identification of individual floc components (e.g., clays, non-clay minerals and bacteria), and characterisation of particle-particle and structural associations across scales. This novel dataset demonstrates the truly complex structure of natural flocs at multiple scales. The integration of multiscale, state-of-the-art instrumentation/techniques offers the potential to generate fundamental new understanding of floc composition, structure and behaviour

The Implications of Managed Care and Selective Contracting for Medical Groups*

Managed care organizations may exert monopsony power, reduce provider monopoly, or engage in bargaining with providers. Furthermore, managed care may be price-discriminating buyers or permit providers to be price-discriminating sellers. The relevant model is likely to depend on the market structure and state insurance regulations. The first empirical analyses in this dissertation test the idea that HMOs increase the price elasticity of demand for services provided by medical groups, but state selective contracting regulations prevent them. A new empirical industrial organization method is applied to data from the Medical Group Management Association to measure the elasticity of demand faced by individual medical groups. The results indicate that demand is almost fully elastic in markets where HMOs prevail and are permitted to selectively contract with a large number of competing medical groups, while it is relatively inelastic where none of these conditions are met. Results considering all markets in the US provide minimal evidence that this model prevails overall, where the coefficients are insignificant but directionally support the model. The weakness of these results suggests that HMOs may have other effects in the average market. The second set of empirical work considers whether groups reorganize their practices for efficiency or bargaining motives. Additionally, a theoretical model that allows medical groups to choose size for bargaining purposes is outlined. Estimations are performed both as a cross-section at the market level and as first-difference at the group level to determine whether groups add physicians, expand output, or become more prevalent or concentrated as HMO enrollment increases, particularly in non-regulated states. The results suggest that medical groups have lagged responses to managed care, where growth is greatest in competitive markets. This supports the view that groups respond for efficiency reasons. No support was found for the bargaining motive. The final empirical work examines medical group cost functions. The results suggest that a majority of groups practice on a downward-sloping segment of the average cost curve at outputs below the minimum efficient scale. These results collectively support the model that managed care can reduce physician market power and physicians respond for efficiency concerns. *This project was supported by grant number R03 HS11932 from the Agency for Healthcare Research and Quality

The Implications of Managed Care and Selective Contracting for Medical Groups*

Managed care organizations may exert monopsony power, reduce provider monopoly, or engage in bargaining with providers. Furthermore, managed care may be price-discriminating buyers or permit providers to be price-discriminating sellers. The relevant model is likely to depend on the market structure and state insurance regulations. The first empirical analyses in this dissertation test the idea that HMOs increase the price elasticity of demand for services provided by medical groups, but state selective contracting regulations prevent them. A new empirical industrial organization method is applied to data from the Medical Group Management Association to measure the elasticity of demand faced by individual medical groups. The results indicate that demand is almost fully elastic in markets where HMOs prevail and are permitted to selectively contract with a large number of competing medical groups, while it is relatively inelastic where none of these conditions are met. Results considering all markets in the US provide minimal evidence that this model prevails overall, where the coefficients are insignificant but directionally support the model. The weakness of these results suggests that HMOs may have other effects in the average market. The second set of empirical work considers whether groups reorganize their practices for efficiency or bargaining motives. Additionally, a theoretical model that allows medical groups to choose size for bargaining purposes is outlined. Estimations are performed both as a cross-section at the market level and as first-difference at the group level to determine whether groups add physicians, expand output, or become more prevalent or concentrated as HMO enrollment increases, particularly in non-regulated states. The results suggest that medical groups have lagged responses to managed care, where growth is greatest in competitive markets. This supports the view that groups respond for efficiency reasons. No support was found for the bargaining motive. The final empirical work examines medical group cost functions. The results suggest that a majority of groups practice on a downward-sloping segment of the average cost curve at outputs below the minimum efficient scale. These results collectively support the model that managed care can reduce physician market power and physicians respond for efficiency concerns. *This project was supported by grant number R03 HS11932 from the Agency for Healthcare Research and Quality