The role of government reimbursement in drug shortages
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2017-05-01
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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.
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Yurukoglu, A, E Liebman and DB Ridley (2017). The role of government reimbursement in drug shortages. American Economic Journal: Economic Policy, 9(2). pp. 348–382. 10.1257/pol.20160035 Retrieved from https://hdl.handle.net/10161/15916.
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David Blaine Ridley
David Ridley, PhD, is a health economist at Duke University's Fuqua School of Business. His research focuses on incentives for innovation and quality, as well as pricing. He is dedicated to creating and studying tools that improve health.
David was the lead author of two papers that became law. He and his colleagues proposed the Food and Drug Administration (FDA) priority review voucher program which became law in 2007. The vouchers provide incentives for drug development for neglected and rare diseases. The FDA has awarded more than 80 vouchers valued at about $100 million each. David and his colleagues also proposed the Environmental Protection Agency vector expedited review voucher program which became law in 2022.
David has served for more than a decade as the Faculty Director of the Center for Health Sector Management (HSM). HSM students comprise about 20 percent of Duke MBA graduates each year.
David's primary appointment is at the business school with honorary appointments in the Department of Economics and Sanford School of Public Policy. He also serves on the executive faculty committee of the Duke-Margolis Institute for Health Policy.
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