Azfar Baharudin
Ph.D Candidate
Job Market Candidate, 2025-2026
Economics
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Fields: Health Economics, Industrial Organization, Education economics, Public Economics
References: Marcus Casey, Yiqun Chen, Javaeria Qureshi
Job Market Paper: Demand Estimation for Weight Loss Pharmacotherapy: Structural Evidence on Treatment Substitution, Preference Heterogeneity, and Welfare Implications of Cost-Sharing Design
Abstract: As weight-management (WM) therapies grow, so does the need for the empirical characterization of this market. This paper models patients’ demand for WM pharmacotherapy, in which baseline results indicate limited responsiveness to prices. The preferred model shows that patients’ demand for WM pharmacotherapy is relatively elastic. Own-price elasticity magnitudes are the largest for Adipex-P at -7.23, Lomaira at -6.19, and Xenical at -5.17. The lowest elasticity magnitudes are found for liraglutide at -0.64, naltrexone/bupropion at -1.26, and Wegovy at -1.61, with the remaining medications ranging from -2.15 to -4.74. Cross-price elasticities and diversion ratios indicate relatively strong within-class substitution among WM-indicated GLP-1s and among phentermine-based appetite suppressants, where lower prices for generic phentermine divert demand away from brand names. With price perturbations, all medications, including GLP-1s, gain most market share from the outside option. Moreover, income and the presence of diabetes are statistically significant determinants of preference for GLP-1 medications, indicating higher valuation among these patient segments. Income is also found to moderate price disutility. There is limited evidence for unobserved heterogeneity in price sensitivity. Additionally, willingness-to-pay (WTP) for GLP-1s increases with income, with the steepest marginal WTP at the 90th percentile. Counterfactual simulations show that a budget-neutral reference-pricing design is not welfare-enhancing relative to the status quo, but frameworks in which patient-borne costs are disciplined could improve outcomes.