Data and Code for: The Effect of Public Insurance Design on Pharmaceutical Prices: Evidence from Medicare Part D

Public programs that provide benefits through private markets contend with strategic firm behavior. We study this dynamic in Medicare Part D. The Affordable Care Act closed a coverage gap in Part D by mandating drug manufacturers cover 50% of branded drug costs in the gap. Beneficiaries became 5 percentage points less likely to forgo prescriptions upon reaching the gap. However, manufacturers' response led to 21% higher drug prices, partially offsetting the insurance expansion. The closure was intended to be a $100 transfer to beneficiaries financed by manufacturers, but instead resulted in a $55 transfer to beneficiaries financed by the government.