History Dependence in Drug Demand: Identification and Implications for Entry Incentives

• 成果类型: Article
• 署名作者: Feng, Josh
• 署名单位: Utah System of Higher Education; University of Utah
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/rest_a_01159
• 发表日期: 2024-03
• 页码: 455-469
• 关键词: medicare part d; state dependence; MARKETS; deterrence; inertia; MODEL

摘要

I use temporal discontinuities in choice sets to identify history dependence in drug demand, finding large and long-term effects. Quasi-randomly assigning a patient to a drug today increases the probability she is taking the same drug four years later by 54 percentage points. History dependence is stronger in patients taking multiple medications and weaker in drugs that are significantly more effective than substitutes. It is also weaker in generics and line extensions, driven by switching from the reference branded drug. I use a pair-specific switching-cost model to capture these patterns and provide suggestive evidence that they affect manufacturers' entry timing incentives.