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Does physicians' compensation affect the probability of their vetoing generic substitution?

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  • Granlund, David

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    (Department of Economics, Umeå University)

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    Abstract

    Physicians' decisions whether or not to veto generic substitution were analyzed using a sample of 350,000 pharmaceutical prescriptions. Point estimates show that - compared to county-employed physicians on salary - physicians working at private practices were 50-80% more likely to veto substitution. The results indicate that this difference is explained by the difference in direct cost associated with substitution, rather than by private physicians' possibly stronger incentives to please their patients. Also, the probability of a veto was found to increase as patients' copayments decreased. This might indicate moral hazard in insurance, though other explanations are plausible.

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    File URL: http://www.econ.umu.se/DownloadAsset.action?contentId=48112&languageId=3&assetKey=ues729
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    Bibliographic Info

    Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 729.

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    Length: 23 pages
    Date of creation: 01 Feb 2008
    Date of revision: 26 Mar 2008
    Handle: RePEc:hhs:umnees:0729

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    Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
    Phone: 090 - 786 61 42
    Fax: 090 - 77 23 02
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    Web page: http://www.econ.umu.se/
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    Related research

    Keywords: doctors; salary; fee for service; moral hazard; prescriptions; drugs;

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    References

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    1. Granlund, David & Rudholm, Niklas, 2007. "Consumer Information and Pharmaceutical Prices: Theory and Evidence," HUI Working Papers 8, HUI Research.
    2. Crown William H. & Berndt Ernst R. & Baser Onur & Finkelstein Stan N. & Witt Whitney P. & Maguire Jonathan & Haver Kenan E., 2004. "Benefit Plan Design and Prescription Drug Utilization Among Asthmatics: Do Patient Copayments Matter?," Forum for Health Economics & Policy, De Gruyter, vol. 7(1), pages 1-35, January.
    3. Leibowitz, Arleen & Manning, Willard G. & Newhouse, Joseph P., 1985. "The demand for prescription drugs as a function of cost-sharing," Social Science & Medicine, Elsevier, vol. 21(10), pages 1063-1069, January.
    4. Granlund, David & Rudholm, Niklas, 2007. "Consumer Information and Pharmaceutical Prices: Theory and Evidence," UmeÃ¥ Economic Studies 709, Umeå University, Department of Economics.
    5. Granlund, David & Rudholm, Niklas & Wikström, Magnus, 2004. "Fixed Budgets as a Cost Containment Measure for Pharmaceuticals," UmeÃ¥ Economic Studies 639, Umeå University, Department of Economics.
    6. Lundin, Douglas, 2000. "Moral hazard in physician prescription behavior," Journal of Health Economics, Elsevier, vol. 19(5), pages 639-662, September.
    7. Dusheiko, Mark & Gravelle, Hugh & Jacobs, Rowena & Smith, Peter, 2006. "The effect of financial incentives on gatekeeping doctors: Evidence from a natural experiment," Journal of Health Economics, Elsevier, vol. 25(3), pages 449-478, May.
    8. David Whynes & Darrin Baines & Keith Tolley, 1997. "Prescribing costs in UK general practice: the impact of hard budget constraints," Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 393-399.
    9. Blomqvist, Ake, 1991. "The doctor as double agent: Information asymmetry, health insurance, and medical care," Journal of Health Economics, Elsevier, vol. 10(4), pages 411-432.
    10. William H. Crown & Ernst R. Berndt & Onur Baser & Stan N. Finkelstein & Whitney P. Witt & Jonathan Maguire & Kenan E. Haver, 2004. "Benefit Plan Design and Prescription Drug Utilization Among Asthmatics: Do Patient Copayments Matter?," NBER Chapters, in: Frontiers in Health Policy Research, Volume 7, pages 95-128 National Bureau of Economic Research, Inc.
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    Cited by:
    1. Granlund, David & Rudholm, Niklas, 2008. "Consumer Loyalty in the Swedish Pharmaceuticals Market," HUI Working Papers 17, HUI Research.

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