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The Demand for Post-Patent Prescription Pharmaceuticals

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  • Judith K. Hellerstein

Abstract

This paper examines why physicians continue to prescribe trade- name drugs when less expensive generic substitutes are available. I utilize a data set on physicians, their patients, and the multi-source drugs prescribed to study the prescription habits of physicians in prescribing generic and trade-name drugs. The results indicate that almost all physicians prescribe both types of drugs to their patients. There is, however, persistence in the prescription behavior of physicians, so that some physicians are more likely to prescribe trade-name drugs, while others more often prescribe generics. While much of this persistence cannot be explained by observable characteristics of the physician or the physician's patients, patients who are treated by physicians with large numbers of HMO or pre-paid patients are more likely to be prescribed generics, and there is wide regional variation in the propensity of physicians to prescribe generic drugs. The results are most consistent with an explanation of physicians' prescription behavior based on habit persistence.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4981.

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Date of creation: Dec 1994
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Handle: RePEc:nbr:nberwo:4981

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  1. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  2. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-64, May.
  3. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  4. Dranove, David, 1989. "Medicaid Drug Formulary Restrictions," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 143-62, April.
  5. Ernst R. Berndt & Zvi Griliches & Joshua G. Rosett, 1990. "On the Accuracy of Producer Price Indexes for Pharmaceutical Preparations: An Audit Based on Detailed Firm-Specific Data," NBER Working Papers 3490, National Bureau of Economic Research, Inc.
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Cited by:
  1. repec:idb:brikps:53858 is not listed on IDEAS
  2. Julien Werle & Vincent Perrin & Edouard Martin & Stéphane Jacobzonne, 1997. "Une approche hedonique de la formation des prix des médicaments remboursables," Économie et Prévision, Programme National Persée, vol. 129(3), pages 73-99.
  3. Susana Narciso, 2005. "Retailing Policies for Generic Medicines," International Journal of Health Care Finance and Economics, Springer, vol. 5(2), pages 165-190, June.
  4. Rika Onishi Mortimer, 1998. "Demand for Prescription Drugs: The Effects of Managed Care Pharmacy Benefits," HEW 9802002, EconWPA.
  5. Paul Missios & Ida Ferrara, 2010. "Pricing of Drugs with Heterogeneous Health Insurance Coverage," Working Papers 026, Ryerson University, Department of Economics.
  6. Ying Kong, 2009. "Competition between brand-name and generics - analysis on pricing of brand-name pharmaceutical," Health Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 591-606.

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