Abstract: Faced with growing drug expenditures, drug insurance plan executives have adopted various cost containment measures. One such policy, reference pricing (RP), limits drug plan reimbursement of interchangeable medicines to a reference price, which is typically equal to the price of the lowest cost interchangeable drug; any cost above that is borne by the patient. RP policies vary in the extent to which drugs are considered interchangeable by a particular plan (Lopez-Casasnovas and Puig-Junoy 2000). Under its most restrictive form—Type 1 RP—on...
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Topics: 
Actuarial science