Manufacturer's Price Research Articles

Study on Dual-channel Supply Chain Game Under Carbon Subsidy Policy

In this work, dual-channel supply chain price models and their optimal strategy were studied under government low-carbon innovative subsidies. The decision-making mechanism and complex dynamical characteristics of manufacturer's wholesale price and retailers’ sales commissions were discussed. The results showed that when the government implements low-carbon subsidy policy, the change of price adjustment coefficient of manufacturer, online and offline retailers will lead to the instability of system, and manufacturer has more influence on the price system than retailers. Consumers’ low-carbon preference is conducive for manufacturer and retailers to increase sales prices, but if consumers over pursue low-carbon products, the price system will also fall into chaos, which will cause fluctuations and losses in profits of supply chain members.

Government regulations to mitigate the shortage of life-saving goods in the face of a pandemic

During a pandemic, it is essential to secure a broad allocation of life-saving goods, such as medical and protective products, to save lives. However, these goods are often in short supply, due to consumer hoarding, insufficient manufacturing capacity and price gouging. Herein, we develop a game-theoretic supply chain model to evaluate the impact of government regulations on the shortage of life-saving goods and profit within the supply chain. Our model considers three types of regulation: (i) price regulation in the form of a price cap, (ii) purchase regulation or demand rationing and (iii) a combination thereof. The most distinguishing feature of our model is that it captures consumer panic buying, insufficient capacity, price surges and controls on the supply and demand side of the supply chain that are widely observed during a pandemic. The results establish reasonably simple prescriptions for policymakers to design effective and easy-to-implement regulations to mitigate shortages of critical supplies in the face of a pandemic.

End of Life Option Act Update

End of Life Option Act Update

Renewable energy supply chain management with flexibility and automation in a production system

Due to technological development, there has been a rapid increase in energy demand, but the amount of available energy is not infinite. There is a daily increase in the price per unit of energy. At present, renewable energy is the option as a substitute for traditional energy. Based on this premise, this study introduces an energy supply chain management, where renewable energy can be converted from waste. The significant benefit of this system is that the utilization of waste can mitigate environmental pollution and provide a primary renewable energy source. This way, almost all traditional energy utilized places may have the benefit of using the renewable energy with less cost as waste is the raw material. This study introduces the collection of all waste from a city and ways in which the city can generate renewable energy. The waste supplier and energy manufacturer are the two players involved in this energy supply chain. The supplier collects all waste and transfers it to the manufacturer. Based on equal an unequal power of both players, there are two cases: one case for unequal power with their own profit and the other equal power with their joint profit. The Kuhn–Tucker methodology is utilized because of inequality constraint and that the Stackelberg game theoretic approach maximizes the profit of the energy supply chain because the potentiality of the energy supply chain players may not be identical. The comparative study also provides the supply chain players with equal and unequal power. Numerical experiments prove the effectiveness of this energy supply chain. The numerical investigation finds that the profit associated with the coordination policy case is greater than that from the unequal power case. Though the equal and unequal power of supply chain players are considered, 43.05% more profit is obtained for the cooperation policy. Flexibility of production rate is found strongly dependent on the development cost for both game policy and coordination policy. The sensitivity analysis is conducted for the key parameters of the model. Fifty percentage with positive and negative direction of key parameters are verified to check the effectiveness on the profit. It gives energy selling price and scrap cost of manufacturer are the best and least parameters among all parameters.

Estimated Savings From International Reference Pricing for Prescription Drugs

This study estimates what 2020 national US savings would have been using international reference pricing rather than US manufacturer and net prices for insulins and 50 top brand-name drugs.

High-Temperature Chloride-Carbonate Phase Change Material: Thermal Performances and Modelling of a Packed Bed Storage System for Concentrating Solar Power Plants

Molten salts eutectics are promising candidates as phase change materials (PCMs) for thermal storage applications, especially considering the possibility to store and release heat at high temperatures. Although many compounds have been proposed for this purpose in the scientific literature, very few data are available regarding actual applications. In particular, there is a lack of information concerning thermal storage at temperatures around 600 °C, necessary for the coupling with a highly efficient Rankine cycle powered by concentrated solar power (CSP) plants. In this contest, the present work deals with a thermophysical behavior investigation of a storage heat exchanger containing a cost-effective and safe ternary eutectic, consisting of sodium chloride, potassium chloride, and sodium carbonate. This material was preliminarily and properly selected and characterized to comply with the necessary melting temperature and latent enthalpy. Then, an indirect heat exchanger was considered for the simulation, assuming aluminum capsules to confine the PCM, thus obtaining the maximum possible heat exchange surface and air at 5 bar as heat transfer fluid (HTF). The modelling was carried out setting the inlet and outlet air temperatures at, respectively, 290 °C and 550 °C, obtaining a realistic storage efficiency of around 0.6. Finally, a conservative investment cost was estimated for the storage system, demonstrating a real possible economic benefit in using these types of materials and heat exchange geometries, with the results varying, according to possible manufacturing prices, in a range from 25 to 40 EUR/kWh.

Lead-time quotation and hedging coordination in make-to-order supply chain

In the Make-To-Order (MTO) supply chain, for enticing the retailer to choose a shorter delivery lead-time, which improves the manufacturer's wholesale prices, the manufacturer adopts the Production Time Hedging (PTH) strategy as an incentive. Since the profit of the retailer depends not only on the Quoted Delivery Lead-Time (QDLT) but also on the Realized Delivery Lead-Time (RDLT), effectively hedging production time uncertainty reduces tardy delivery. We build an analytical model to investigate how PTH affects the retailer's QDLT decision and the supply chain performance. We consider models for four scenarios, namely (I) the centralized model, (II) the Nash model, (III) the manufacturer-led Stackelberg model, and (IV) the retailer-led Stackelberg model. We derive close-form results on the optimal hedging and QDLT decisions. In models II and III, PTH reduces the QDLT under all the conditions. However, in model IV, PTH can only coordinate the retailer when the hedging cost is low, or the holding cost/tardiness penalty is high. Besides, we find that model III is the dominant scenario for both players. Extending model IV to consider the case where the retailer sources from multiple manufacturers, we show that multiple sourcing is the dominant strategy when a manufacturer's hedging cost is high, or its holding cost/lead-time sensitivity factor is small. From the numerical study, we are interesting to find that the retailer's profit increases with the manufacturer's holding cost/lead-time sensitivity factor.

Substantiation of the methodological approach to the complex use of economic and marketing components when forming the added value of rabeprazole

Aim. To substantiate the methodological approach and work out the method for determining economic and marketing components of the cost price, the price and the added value of the drug on the example of Rabeprazole. 
 Materials and methods. Scientific publications, reports of the State Statistics Committee of Ukraine and Centre for Medical Statistics of the MHU, reports and calculations of the cost price of pharmaceutical manufacturers, our own research, as well as methods of systematic, comparative, content-analysis, economic and marketing analysis were used as materials. 
 Results. The stages of work have been summarized, and the algorithm for determining the basic indicators required for manufacturing of drugs has been formed. An extended scheme of calculation of the cost price of products based on the economic approach has been developed; the formation of retail and wholesale price and determination of the wholesale sale value of the drug on the basis of the marketing approach have been studied. The method for determining the basic economic indicators according to the market economic approach, calculation of the added value tax, income and profitability has been worked out on the example of rabeprazole. The distribution of the added value among the subjects of drug promotion and the structure of the added value of the manufacturer have been estimated.
 Conclusions. The expediency and the necessity of using economic and marketing approaches of the cost management has been substantiated. The cost price and the formation of price for a drug has been calculated, and themethodological approach has been suggested. To assess the total market economic approach as to the determination of the cost price and the price of drug, a graphic scheme of economic and marketing approaches for determining the cost price and the price of drug (progressive retrograde calculation) has been developed. On the example of rabeprazole tablets (0.01 g) the method for determining the cost price, the price, the income and the added value of a drug manufacturer, wholesaler and pharmacy has been studied. The structure of the added value of the drug manufacturer has been characterized.

The impact of Renewable Portfolio Standards on carbon emission trading under the background of China’s electricity marketization reform

Carbon emission trading (CET) is an important mechanism for China to achieve carbon emission reduction targets and sustainable development. The success of its implementation depends on the scientific institutional supply design. At present, China is actively promoting the implementation of electricity marketization reform and Renewable Portfolio Standards (RPS), which would change the institutional environment for manufacturers’ decision-making and trading, thus impacting CET. Accordingly, this paper aims to establish an evaluation model using the system dynamics method to simulate and evaluate the impact of RPS on CET under the background of electricity marketization reform by designing and combining different policy scenarios. The results show that: (1) The impact of electricity marketization reform and RPS on carbon trading is mainly reflected in carbon emission rights’ demand, trading volume, trading price and power generation of manufacturers. (2) Under the situation of marketed electricity price and the absence of RPS, various indicators of the CET market are superior to other policy combinations. (3) Marketed electricity price can effectively stimulate manufacturers’ demand for carbon emission rights, increase trading volume, and have a positive impact on CET. However, the implementation of RPS weakens the demand for emission rights, reduces manufacturers’ power generation and profit, and harms CET.

Online channel strategies under different offline channel power structures

This study explores the manufacturer's marketing and pricing strategies for online channel under different offline channel power structures. Through these strategies, the manufacturer sells products through an offline retailer and an e-tailer. The manufacturer decides the cooperation mode with the e-tailer by the reselling or the agency selling mode and the pricing strategy on the basis of the power structures, i.e., vertical Nash structure (VN), manufacturer Stackelberg structure (MS), and retailer Stackelberg structure (RS). We find the manufacturer selects the online agency selling mode when the commission rate is less than the given threshold. As long as the commission rate is more than another threshold, the manufacturer selects the online reselling mode under the VN structure; however, the manufacturer selects the online agency selling mode under the other two structures. As well, the offline wholesale price is higher under the MS structure than those under the VN and RS structures. When the manufacturer selects the online agency selling mode, the offline retail price is highest under the MS structure, and the online retail price is highest under the VN structure. Meanwhile, consumers can always obtain a higher surplus in the online agency selling mode under all offline power structures.

Information sharing motivated by production cost reduction in a supply chain with downstream competition

AbstractThis paper studies demand information sharing in a two‐echelon supply chain consisting of one manufacturer and two retailers, an informed retailer and an uninformed retailer. The retailers engage in Cournot competition or Bertrand competition. The manufacturer can conduct cost reduction, while the informed retailer has the decision power to opt for a sharing format, among no sharing, partial sharing (only with the manufacturer), and full sharing. Under partial sharing, the uninformed retailer infers the demand information from the manufacturer's wholesale price. We find that the inference effect, that is, the presence of the manufacturer's pricing distortion, depends on the manufacturer's cost‐reduction efficiency and the retailers' competition mode. Under low cost‐reduction efficiency, the inference effect makes the retailers worse off in quantity competition, whereas it is beneficial to them in price competition. On the contrary, under high efficiency, the retailers benefit from the inference effect in quantity competition, whereas they become worse off in price competition. By contrast, the inference effect only makes the manufacturer worse off. The uninformed retailer may prefer partial sharing to full sharing, while the informed retailer may be indifferent between full sharing and partial sharing.

A Model of Waste Price in a Symbiotic Supply Chain Based on Stackelberg Algorithm

By establishing a two-level symbiotic supply chain system consisting of one supplier and one manufacturer, we use Stackelberg method to analyze the optimal price and revenue model of supplier and manufacturer in the symbiotic supply chain under two power structures in which the supplier and manufacturer are dominant respectively, and analyze the influence of the degree of symbiosis and power structure on the model. Through comparative analysis, we find that: There is a relationship between the income level and the degree of symbiosis in the symbiotic supply chain. The change of power structure will affect the relative benefits of suppliers and manufacturers in the symbiotic supply chain. The manufacturer’s expected unit product revenue will affect the supply chain revenue when the manufacturer is dominant. Finally, the sensitivity analysis of relevant parameters is carried out through an example analysis, and the validity of the conclusion is verified. This paper has a guiding significance for the behavior of enterprises in the cogeneration supply chain.

Optimization of a Horizontal Axis Tidal (HAT) turbine for powering a Reverse Osmosis (RO) desalination system using Computational Fluid Dynamics (CFD) and Taguchi method

Horizontal Axis Tidal (HAT) turbines can be used to power RO (reverse osmosis) desalination systems. The greatest weakness of these turbines is the high price of design, development, and manufacturing. Traditionally, optimization of turbine geometry is achieved by running several numerical models of the turbine which can become time consuming and expensive. The Taguchi-CFD (Computational Fluid Dynamics) approach has recently been introduced as an inexpensive and rapid tool for optimizing industrial devices. This technique can be used as a straightforward solution for optimization of geometry of HAT turbines. In this work, a conceptual design of a tidal power reverse osmosis (TPRO) desalination unit was proposed. Subsequently, the geometry of the HAT turbine, which can power the whole desalination system, was optimized with combination of only 16 CFD simulations using the Taguchi method. The effects of blade size, number of blades, hub radius, and hub shape were studied and optimized. The Taguchi results revealed that the most important parameters influencing the power output of HAT turbine are the number of blades, size of blade, hub radius, and hub shape respectively. Moreover, the results of the superposition model showed that the minimum signal-to-noise ratio (SNR) is 21% less than the amount achieved in the Taguchi approach. The power coefficient (Cp) of the optimized HAT turbine was 0.44 according to the results of CFD simulations, which was 10% higher than that of the baseline model (0.40) at tip speed ratio (TSR) of 5. The weight of the optimized model was less than the baseline model by 17%. The results of this study provide a comprehensive guidance for horizontal turbine optimization process.

Scientific Data Analysis: Employing Sentimental Analysis to Prove Correlation Between Social Media and Electric Vehicles in Modern Society

In recent decades, the development of technology has brought several changes in the global society. Enhanced communication methods enabled rapid dissemination of information, impacting peoples’ decision making and consumption. Moreover, indiscreet production and resource consumption caused environmental damage, hence leading to the advent of electric vehicles in the automotive industry. This research paper delves into the influence of social media on market share and stock prices of electric vehicle manufacturers. Social media plays a significant role in conveying information and therefore influencing consumption. To conduct research, we gathered data – tweets, news articles, EV stock prices, EV market shares, air quality of major cities – to prove correlation between social media and EV stock prices. Market data were mainly used for analysis and prediction, and information regarding air quality was used to explain how electric vehicles could gather huge momentum. We analyzed how electric vehicle market shares have changed in 10 years, and how individual manufacturers, such as Tesla, General Motors, and Hyundai, increased production and sales over time, using data analysis and visualization. By comparing these data with media coverage of electric vehicles using sentimental analysis, we could figure out how social media could impact sales and stock prices of automotive producers. The main driving force of the meteoric rise of electric vehicles was favorable media coverage of electric vehicles. Data collection was done by effective Python tools that could significantly reduce time.

Some Aspects of Modern Drones

Today drones have become so important that everyday life can no longer be conceived without them. The paper wishes to present some essential aspects regarding modern drones, their capabilities and their uses. Drones and minnies drones have penetrated deep into technology, industry, agriculture, the military and police area, security services, security and control, aerial surveillance, signaling, aerial filming, cartography, danger and fire signaling in a timely manner, surveillance missions, security, defense and attack. The major advantages of drones compared to conventional aircraft are the following: A much lower fuel consumption and a much lower polarization of the environment, sometimes the pole does not even exist the drones being electrically moved; much lower design, manufacturing, maintenance and operation prices. They do not require pilots, they are generally small and the manufacturing costs and materials are much reduced; in case of collisions they are very resistant, accidents with them being rare and without tragic consequences; they can operate various things without a pilot, without costs, without risks, with superior results to those of classic aviation. A simple way to reduce the consumption of raw materials needed by industries is the very economy of materials used in industries and the start must be made even with heavy industries and car manufacturers and primarily those in aviation and aerospace. With drones, the consumption of materials is extraordinary compared to the materials stored in old, classic, huge ships. Of course, large public aircraft are still needed for public passenger transport, which, no matter how redesigned, will still consume a lot of materials and energy, but for other daily air operations, drones will be able to successfully intervene in place of large and heavy ships. These areas will see huge savings in materials, not to mention the very low costs of people who will be replaced by robots, vending machines, cameras, low fuel consumption and the reduction and even elimination of massive pollution that was done by a massive use of large aircraft for any minor operations requiring flights. The drones come to usefully and efficiently complete large and important areas of flight, difficult and meticulous operations, the drones clearly having increased capabilities and much higher penetration.

“Production + procurement” outsourcing with competitive contract manufacturer's partial learning and supplier's price discrimination

AbstractIt is widely observed that many original equipment manufacturers (OEMs) have relied on contract manufacturers (CMs) for production, even if the CMs have self‐branded business. However, outsourcing “production + procurement” indicates deep cooperation between OEMs and CMs, and hence, induces the CMs to partially but legally learn the OEM's innovations. In this paper, we formulate an OEM's procurement outsourcing decisions to a competitive CM when the latter has partial learning ability. We formulate the OEM's trade‐offs between its procurement cost saving and the intensified downstream competition because of the competitive CM's improved products. We find that the OEM prefers outsourcing “production + procurement” when the competitive CM's learning ability is either low or high. The CM's high learning ability will lower the OEM's marginal revenue but the OEM can save innovation investment cost if he outsources “production + procurement”. We also study the impact of the competitive CM's improved learning ability and the OEM's license fee charged to the competitive CM.

Sustained acoustic medicine as a non-surgical and non-opioid knee osteoarthritis treatment option: a health economic cost-effectiveness analysis for symptom management

BackgroundPatients diagnosed with osteoarthritis (OA) and presenting with symptoms are seeking conservative treatment options to reduce pain, improve function, and avoid surgery. Sustained acoustic medicine (SAM), a multi-hour treatment has demonstrated improved clinical outcomes for patients with knee OA. The purpose of this analysis was to compare the costs and effectiveness of multi-hour SAM treatment versus the standard of care (SOC) over a 6-month timeframe for OA symptom management.MethodsA decision tree analysis was used to compare the costs and effectiveness of SAM treatment versus SOC in patients with OA. Probabilities of success for OA treatment and effectiveness were derived from the literature using systematic reviews and meta-analyses. Costs were derived from Medicare payment rates and manufacturer prices. Functional effectiveness was measured as the effect size of a therapy and treatment pathways compared to a SOC treatment pathway. A sensitivity analysis was performed to determine which cost variables had the greatest effect on deciding which option was the least costly. An incremental cost-effectiveness plot comparing SAM treatment vs. SOC was also generated using 1000 iterations of the model. Lastly, the incremental cost-effectiveness ratio (ICER) was calculated as the (cost of SAM minus cost of SOC) divided by (functional effectiveness of SAM minus functional effectiveness of SOC).ResultsBase case demonstrated that over 6 months, the cost and functional effectiveness of SAM was $8641 and 0.52 versus SOC at: $6281 and 0.39, respectively. Sensitivity analysis demonstrated that in order for SAM to be the less expensive option, the cost per 15-min session of PT would need to be greater than $88, or SAM would need to be priced at less than or equal to $2276. Incremental cost-effectiveness demonstrated that most of the time (84%) SAM treatment resulted in improved functional effectiveness but at a higher cost than SOC.ConclusionIn patients with osteoarthritis, SAM treatment demonstrated improved pain and functional gains compared to SOC but at an increased cost. Based on the SAM treatment ICER score being ≤ $50,000, it appears that SAM is a cost-effective treatment for knee OA.

ОГЛЯД РОЗВИТКУ ВИРОБНИЦТВА АНТИСЕПТИЧНИХ ЗАСОБІВ В УКРАЇНІ

The global trend to raise awareness of hygiene and prevent the spread of infections is increasing the demand for antiseptics. In 2019, the European antiseptic market was estimated at 2.33 billion dollars. and by 2024 will reach 3.2 billion and the North American market of antiseptics amounted to 1.6 billion dollars. and by 2024 will reach 2.17 billion dollars. In 2019, the market for antiseptics in Ukraine was approximately 4,000 tons. Development of the domestic market of antiseptics, which consists of two stages – until early 2020, when demand was stable (limited by the B2B market and small antiseptics for personal use) and after early 2020 – a sharp increase in the market due to the emergence of coronavirus. Against the background of the coronavirus and quarantine pandemic in Ukraine there was a sharp jump in demand for antiseptics and their shortage, which was caused by two main factors: the bureaucratic barrier and shortage of raw materials (annual decline in ethyl alcohol production (the main component of antiseptics) ranged from 6 to 15 %%). Analysis of the data of the Compendium on 01.09.2020 allowed to analyze the registered 52 trade names of antiseptics and disinfectants. The domestic market is satisfied with the products of local pharmaceutical plants (Antiseptol H (Antiseptol H) 100 ml, LLC «FP Zdorovya»; Ethyl alcohol 96% 100 ml (Ethyl alcohol 96%), LLC «FP Zdorovya»). A study of the price range for antiseptics of the group «D08 – antiseptics and disinfectants» found that traditionally the prices of domestic manufacturers are much lower than foreign – prices ranged from 03-45 UAH. up to UAH 789-12. and for foreign – from 10-25 UAH. up to 1100-35 hryvnias. It was found that at the time of analysis from the subgroup «D08A X08 Ethanol» 38 (73%) of registered antiseptics are in circulation in the pharmaceutical market of the country, and 14 (27%) are absent. As a result of the legal regulation of antiseptics on businesses that are also producers of alcohol, now it has the right to produce and sell antiseptics under license for the production and wholesale of alcohol. The development of antiseptic production was considered on the example of the domestic manufacturer LLC «Biofuel and Energy Company», which during the crisis established the production and wholesale of «Hygienic detergent BIOSEPT». The problem of development of antiseptic production in Ukraine is relevant today in connection with the spread of COVID-19 in the world, the prevention of which is aimed at compliance with sanitary requirements with the use of antiseptics and disinfectants

Pricing and production decisions in a dual-channel closed-loop supply chain with (re)manufacturing

The development of information technologies and e-commerce has allowed many companies to set up online platforms to sell their products in dual-channel supply chain (SC) networks. The double competition between new and remanufactured products within channels and across competing channels affects manufacturer and retailer pricing decisions. However, the current state of the literature shows a gap in the modelling and analysis of a dual-channel SC with both cross-channel competition and channel costs. To fill this gap, this paper develops a model for a CLSC in which the manufacturer sells new products through a retail channel and also directly through its online channel. The manufacturer may also sell remanufactured products in its online direct channel if it decides to produce them. The results indicate that: (i) the manufacturer’s production and optimal pricing strategies depend on both production and channel selling costs; (ii) remanufacturing is not considered by the manufacturer when the unit manufacturing cost is sufficiently low and the retailer’s channel cost is sufficiently high; (iii) the introduction of remanufacturing hurts the retailer’s profit only when the unit manufacturing cost is sufficiently high; and (iv) selling the new product online mitigates the effect of remanufacturing on the retailer, and thus a high customer’s acceptance of the remanufactured product can benefit the retailer.

Association Between the Percentage of US Drug Sales Subject to Inflation Penalties and the Extent of Drug Price Increases

Policy makers have proposed levying penalties for drug price increases that are higher than the rate of inflation for drugs covered in the US Medicare program, but research is lacking regarding the ways in which manufacturers might respond to those penalties. An understanding of manufacturers' responses to existing inflation penalties could inform such policy discussions. To estimate the association of existing inflation penalties in the US 340B Drug Pricing Program with manufacturer pricing behavior in the Medicare Part D program and associated changes in Medicare pharmacy expenditures. This study included a pooled cross-sectional time-series analysis of price changes for Medicare Part D drugs used annually by more than 5000 beneficiaries between January 1, 2013, and December 31, 2017. The percentage of Medicare Part D sales subject to inflation penalties in the 340B program was used to perform a regression analysis to estimate the association of inflation penalties with annual drug price changes. The 340B program requires manufacturers to sell their drugs at a lower price to safety-net health care organizations; this lower price includes a base discount and an additional discount equal to the amount of any price increase that is higher than the rate of inflation. Sales to these 340B-eligible health care organizations represent the market share of a drug subject to inflation penalties. Health care organization-level claims data were obtained from the Medicare Provider Utilization and Payment Data-Part D Prescriber database, and organizations were matched to the Office of Pharmacy Affairs Information System of the Health Resources and Services Administration to identify those organizations that were eligible for the 340B program. Price change and drug use data were obtained from the Medicare Part D Drug Spending Dashboard. Name-brand drugs were included in the analysis if they did not have generic competition and were used by more than 5000 individuals with Medicare Part D in 1 calendar year. Data analysis was conducted from January 1 to February 28, 2020. Annual price change was the primary outcome measure; spending changes associated with lower price increases were also estimated. Sales percentage subject to inflation penalties was the primary independent variable, and formulary classification was a control variable. Of 2148 brand-name drugs included in the database, 606 drugs were used by more than 5000 beneficiaries annually, with a mean sales percentage subject to inflation penalties of 12.1%. A higher sales percentage subject to inflation penalties was associated with lower annual price increases (between-effects coefficient, -0.114; 95% CI, -0.205 to -0.023; P = .01; fixed-effects coefficient, -0.380; 95% CI, -0.466 to -0.294; P < .001). Lower price increases owing to inflation penalties were estimated to be associated with a reduction in Medicare Part D pharmacy expenditures of $7.1 billion between 2013 and 2017. In this cross-sectional study, increases in the percentage of drug sales subject to inflation penalties were associated with lower annual price increases. Broader application of inflation penalties may help to reduce drug price increases and decrease overall drug spending.