subsidies for big pharma

George W. Bush’s $600 billion subsidy of prescription drugs for seniors (Medicare Modernization Act of 2003) was a bonanza for pharmaceutical companies, but did it reduce expenditure on other health care services or improve the lives of seniors? Apparently not, concludes a study of the records of 12,000 nationally representative seniors who were interviewed four times a year from 2000 through 2007.

The authors find that … “gaining prescription drug insurance … was associated with [a] 63 percent increase in the number of annual prescriptions.” The increase in prescriptions filled had no discernable effect on the use of other health care services or on health status as measured by functional status or self-reported health.

Robert Kaestner and Nasreen Khan, “Medicare Part D and its Effect on the Use of Prescription Drugs, Use of Other Health Care Services and Health of the Elderly”, NBER Working Paper No. 16011, May 2010.

Summary by Linda Gorman.


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