title: Nonlinear pricing in drug benefits and medication use: the case of statin compliance in Medicare Part D.
abstract: OBJECTIVE
  To examine how enrollees' statin compliance responds to expected prices in Medicare Part D, which features a nonlinear price schedule due to a coverage gap.
  
  
  METHODS
  Prescription Drug Event data for a 5 percent random sample of Medicare Advantage Prescription Drug Plan enrollees in 2008 who did not receive a low-income subsidy.
  
  
  METHODS
  We analyze statin compliance prior to the coverage gap, where the "effective price" is higher than the actual copayment for drugs because consumers anticipate that more spending will make them more likely to reach the gap. We construct each enrollee's effective price as her expected price at the end of the year, which is the weighted average between pre-gap and in-gap copayments with the weight being the predicted probability of hitting the gap. Compliance is defined as at least 80 percent of days covered.
  
  
  RESULTS
  Part D enrollees' pre-gap statin compliance decreases by 3.7-4.7 percentage points for a $10 increase in the effective price.
  
  
  CONCLUSIONS
  The presence of a coverage gap decreases statin compliance prior to the gap, suggesting that incorporating expected future prices is important to assess the full impact of cost sharing on drug compliance under nonlinear price schedules.
authors.affiliation: Department of Health Policy and Administration, College of Health and Human Development, The Pennsylvania State University, University Park, PA.
authors.forename: Kyoungrae
authors.initials: K
authors.lastname: Jung
authors.forename: Roger
authors.initials: R
authors.lastname: Feldman
authors.forename: A Marshall
authors.initials: AM
authors.lastname: McBean
mesh_terms: D000368:Aged; D003365:Costs and Cost Analysis; D005260:Female; D006801:Humans; D019161:Hydroxymethylglutaryl-CoA Reductase Inhibitors / Q000191:economics* / Q000627:therapeutic use*; D008297:Male; D054524:Medicare Part D; D055553:Prescription Drugs / Q000191:economics*; D014481:United States; D016903:Drug Monitoring
chemical_list: D019161:Hydroxymethylglutaryl-CoA Reductase Inhibitors; D055553:Prescription Drugs
keywords: Medicare part D; Nonlinear pricing; statin compliance