Lagged-price reimbursement contracts: The impact of medicare Part B on pharmaceutical price growth
Angelique Acquatella et al.
What the paper says
We examine lagged-price cost-plus reimbursement contracts, focusing on Medicare Part B’s payment for physician-administered drugs. While previous research has shown that Part B increased launch prices, we estimate its effect on later prices and find that lagged-price reimbursement lowers prices in later periods. Drugs more exposed to Medicare reimbursement have lower price growth (net of rebates): a drug with above median Part B exposure has a 10% lower price after 3 years than a below median exposure drug that launched at the same price. The effect is larger for newly approved molecules, which face less competition. • Lagged Medicare reimbursement affects pharmaceutical price trajectories. • Physician-administered drugs with higher exposure to Medicare experience slower price growth. • Price dampening emerges several years after market entry. • Effects are strongest for new drugs facing limited early competition. • Results inform the design of cost-plus procurement contracts.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.