Heinz School Faculty and PhD Student Win First Annual Victor S. Fuchs Research Award

Heinz School faculty Martin Gaynor and William B. Vogt and Heinz School PhD student Jian Li are winners of the first Victor S. Fuchs Research Award. This $10,000 prize, sponsored by RAND, is awarded to the authors of the best paper with the potential to spawn new research in an underdeveloped area of health economics or health policy. Their prize-winning paper is titled: "Substitution, Spending Offsets, and Prescription Drug Benefit Design."

The winning paper has been published in "Forum for Health Economics & Policy," an innovative online journal devoted to timely and important health care issues. The paper examined the effects of increased drug copayments on drug spending and on spending for other medical care. The study used data on individual health insurance claims and benefit data from 1997-2003 to study the effects of changing consumers'
co-payments for prescription drugs on the quantity demanded and expenditure on prescription drugs, inpatient care and outpatient care. Results showed that increases in drug copayments reduce both the use of and spending on prescription drugs. However, consumers substitute the use of other medical care for some prescription drug use-about 35% of the expenditure reductions on prescription drugs are offset by the increases in other medical spending.

"This paper is the first to demonstrate the benefits of generous drug coverage in a stable, employed population," noted one of the Forum's editors, Dana Goldman, Director of Health Economics at RAND. "It confirms what we all expected but could not demonstrate - that encouraging people to take their medicine prevents long-term complications, and ultimately can save a substantial amount of money."

The award is named in honor of Victor Fuchs, a member of the Forum's editorial board whose research demonstrated that economic analysis yielded valuable insight not only about medical resource use but also health related behaviors.

For more on this story, please read the online article in the Pittsburgh Post-Gazette.