“Noon Sunshine-Young Scholars Seminar” is a regular academic exchange platform held by School of Finance. It aims to offer valuable occasions of communications among scholars in our college, between teachers and students, the domestic and the oversea. In this semester, we keep our original intention, set off for a new voyage. We will devote ourselves to fostering the academic atmosphere in the college, and promoting the academic level for both teachers and students.

The third session of “Noon Sunshine-Young Scholars Seminar” for the Spring Semester in 2023 is arranged as follows:

Lecture topic

Brand-name Drug Prices: Evidence from Rx-to-OTC Switch

Keynote Speaker: Wang Bo

Commentator: Minhee Chae

Date

Thursday, May 25th, 2023

Time

12:00-13:00

Lecture Venue  

Room 116, School of Finance

Abstract

This study investigates the effect of marketing status on brand-name pricing, exploiting the change in marketing status when a brand-name prescription (Rx) drug is switched to over the counter (OTC). Using a Stacked DID design and recent Rx-to-OTC switches during the 2001-2016 period, we find that both the retail prices and net prices of brand-name drugs reduce substantially following Rx-to-OTC switch, after controlling for possible confounding effects from patent expiry and competition associated with the switch. We show that the reduction in brand-name prices is primarily driven by increases in patient price elasticity in the OTC market. To combat high brand-name prices, policy makers in the United States should increase patient price sensitivity to brand-name prescription drugs, with Rx-to-OTC switch as a possible solution for brand-name drugs with potentially high patient price sensitivity.