The role of government reimbursement in drug shortages

Journal Article (Journal Article)

Beginning in the mid- 2000s, the incidence of drug shortages rose, especially for generic injectable drugs such as anesthetics and chemotherapy treatments. We examine whether reimbursement changes contributed to the shortages, focusing on a reduction in Medicare Part B reimbursement to providers for drugs. We hypothesize that lower reimbursement put downward pressure on manufacturers' prices, which reduced manufacturers' incentives to invest in capacity, reliability, and new launches. We show that after the policy change, shortages rose more for drugs with higher shares of patients insured by Medicare, greater decreases in provider reimbursement, and greater decreases in manufacturer prices.

Full Text

Duke Authors

Cited Authors

  • Yurukoglu, A; Liebman, E; Ridley, DB

Published Date

  • May 1, 2017

Published In

Volume / Issue

  • 9 / 2

Start / End Page

  • 348 - 382

Electronic International Standard Serial Number (EISSN)

  • 1945-774X

International Standard Serial Number (ISSN)

  • 1945-7731

Digital Object Identifier (DOI)

  • 10.1257/pol.20160035

Citation Source

  • Scopus