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Heterogeneity in Cost-Sharing and Cost-Sensitivity, and the Role of the Prescribing Physician

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  • Mariana Carrera
  • Dana Goldman
  • Geoffrey Joyce
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    Abstract

    In this paper, we use individual level data on purchases of one of the most prescribed categories of drugs (cholesterol-lowering statins) to study the responses of physicians and patients to variation in the cost of drugs. In a sample of first-time statin prescriptions to employees from a group of Fortune 500 firms, we find that copay variation across plans has a relatively small effect on the choice of drug, and this effect does not vary with patient income. After the highly-publicized expiration of the patent for Zocor (simvastatin), however, prescriptions for this drug increased substantially, especially for lower-income patients. Our analysis suggests that physicians can perceive the adherence elasticity of their patients and adjust their initial prescriptions accordingly, but only in response to a large and universal price change. Using prescriber identifiers, we present suggestive evidence that physicians learn about a patient's price sensitivity through their own experience of prescribing to that patient.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19186.

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    Date of creation: Jun 2013
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    Handle: RePEc:nbr:nberwo:19186

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    1. Frank, Richard G. & Zeckhauser, Richard J., 2007. "Custom-made versus ready-to-wear treatments: Behavioral propensities in physicians' choices," Journal of Health Economics, Elsevier, Elsevier, vol. 26(6), pages 1101-1127, December.
    2. Sriram Venkataraman & Stefan Stremersch, 2007. "The Debate on Influencing Doctors' Decisions: Are Drug Characteristics the Missing Link?," Management Science, INFORMS, INFORMS, vol. 53(11), pages 1688-1701, November.
    3. Chandra, Amitabh & Gruber, Jonathan & McKnight, Robin, 2009. "Patient Cost-Sharing and Hospitalization Offsets in the Elderly," Scholarly Articles 8058412, Harvard Kennedy School of Government.
    4. Gaynor Martin & Li Jian & Vogt William B, 2007. "Substitution, Spending Offsets, and Prescription Drug Benefit Design," Forum for Health Economics & Policy, De Gruyter, De Gruyter, vol. 10(2), pages 1-33, July.
    5. Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2011. "Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance," American Economic Review, American Economic Association, American Economic Association, vol. 101(5), pages 1842-71, August.
    6. Hanming Fang & Alessandro Gavazza, 2010. "Dynamic Inefficiencies in an Employment-Based Health Insurance System: Theory and Evidence," Working Papers, Duke University, Department of Economics 10-01, Duke University, Department of Economics.
    7. Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2012. "The Impact of Patient Cost-Sharing on the Poor: Evidence from Massachusetts," NBER Working Papers 18023, National Bureau of Economic Research, Inc.
    8. Judith K. Hellerstein, 1998. "The Importance of the Physician in the Generic Versus Trade-Name Prescription Decision," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 108-136, Spring.
    9. Toshiaki Iizuka, 2012. "Physician Agency and Adoption of Generic Pharmaceuticals," American Economic Review, American Economic Association, American Economic Association, vol. 102(6), pages 2826-58, October.
    10. Anna A. Levine Taub & Anton Kolotilin & Robert S. Gibbons & Ernst R. Berndt, 2011. "The Diversity of Concentrated Prescribing Behavior: An Application to Antipsychotics," NBER Working Papers 16823, National Bureau of Economic Research, Inc.
    11. Venkataraman, S. & Stremersch, S., 2007. "The Debate on Influencing Doctors’ Decisions: Are Drug Characteristics the Missing Link?," ERIM Report Series Research in Management, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasm ERS-2007-056-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    12. Bradley Herring, 2010. "Suboptimal provision of preventive healthcare due to expected enrollee turnover among private insurers," Health Economics, John Wiley & Sons, Ltd., vol. 19(4), pages 438-448.
    13. Lundin, Douglas, 2000. "Moral hazard in physician prescription behavior," Journal of Health Economics, Elsevier, Elsevier, vol. 19(5), pages 639-662, September.
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