Excess medicaid payments and the stock prices of drug companies.

摘要

The study by Bian et al. ("Long-Term Medicaid Excess Payments from Alleged Price Manipulation of Generic Lorazepam") published in the September 2012 issue of JMCP is important to our understanding of anticompetitive pricing for generic drugs. The large sums lost by payers and the public, estimated at approximately $625-$657 million in the case studied by the authors, partly become gains for other parties and partly vanish due to wasteful deadweight loss. Stock price returns help to shed light on these economic issues surrounding the excess Medicaid payments analyzed by Bian et al. By examining, the generic lorazepam manufacturer's stock price return resulting from the price hike, I find evidence that complements the authors' conclusions.