Finance and Financial Management Commons^™

Pharmaceutical Stock Prices Around Medicare Part D Expansion, Spencer Powell

All Graduate Plan B and other Reports, Spring 1920 to Spring 2023

On January 1, 2006 Medicare part D expanded, giving prescription coverage to many Americans. This event offers an interesting question regarding market efficiency, specifically because Medicare expansion was introduced into congress as far back as 1999. Because Medicare part D affected pharmaceutical drug coverage, this study focuses specifically on securities in the pharmaceutical industry. Following an efficient market hypothesis, we would expect to see significant abnormal returns in the post event window, anticipating the legislations effect on demand within the industry. Results showed significant abnormal returns in post-event window, but not in the pre-event window. The returns in the post-event …