The Cost of Permission: Bundled Prescription Access and Consumer Welfare

• In Event: Regulation, Access, and Efficiency in Health Care Markets

Abstract

In the U.S. healthcare system, patients access prescription medications through appointments with physicians who diagnose conditions, screen for contraindications, monitor treatment adherence, and connect patients to complementary preventive care. This bundle of prescription and appointment serves a clear purpose: it allows medical professionals to ensure that patients receive appropriate medications, avoid harmful misuse, and receive medical care they might not otherwise seek. However, the bundle also imposes costs — in time, inconvenience, and money — that can prevent patients from accessing medications they need. The bundle thus creates a tradeoff: it protects patients while also limiting their access to care. The welfare implications of this tradeoff depend on which force dominates, and that balance requires empirical measurement of both the costs and the benefits. On one side, access costs can deter patients causing them to forgo treatment entirely. On the other side, patients receive value through the preventive care, monitoring, and diagnosis that the physician visit provides, including services they might not seek independently. Policies that loosen the bundle offer a rare opportunity to measure both sides simultaneously by expanding access while potentially reducing exposure to the clinical encounter. I apply this framework to state pharmacist prescribing laws for hormonal contraceptives, which effectively unbundle contraceptive prescriptions from the physician visit. Using Merative MarketScan commercial insurance claims and State Drug Utilization Data for the Medicaid population, I estimate the effects of these laws on contraceptive access across both the extensive and intensive margins. I then use MarketScan claims and the Behavioral Risk Factor Surveillance System to measure the costs of forgone clinical care. This paper contributes to the literatures on the economics of bundling, contraceptive access, and preventive care, documenting how policies that expand medication access may simultaneously reduce exposure to clinical services that patients value. Together these estimates form the basis of a welfare calculation that puts the access gains and costs of forgone clinical care on a common scale.

Author

• Jennifer A Mangano, Indiana University
  Presenting Author