ABSTRACT
Consumer demand for prescription drugs is different from demand for many other goods in the economy. Normally, the consumer is not the person who decides which, if any, pharmaceutical agent to use and/or purchase. This judgement is left to a physician or other healthcare professional licensed to write a prescription. Moreover, oftentimes, the insured consumer does not pay the full price for the prescribed medicine. Instead, that person’s insurer normally requires only a nominal copayment at the time of purchase that is usually a fraction of the drug’s true cost. These aspects of the demand for prescription drugs raise interesting agency and information issues that are missing in many other consumer goods markets.
