查看文章

The price elasticity of demand for prescription drugs is a crucial parameter of interest in designing pharmaceutical benefit plans. Estimating the elasticity using micro‐data, however, is challenging because insurance coverage that includes deductibles, co‐insurance provisions and maximum expenditure limits create a non‐linear price schedule, making price endogenous (a function of drug consumption). In this paper we exploit an exogenous change in cost‐sharing within the Quebec (Canada) public Pharmacare program to estimate the price elasticity of expenditure for drugs using IV methods. This approach corrects for the endogeneity of price and incorporates the concept of a ‘rational’ consumer who factors into consumption decisions the price they expect to face at the margin given their expected needs. The IV method is adapted from an approach developed in the public finance literature used to estimate …