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Physician dispensing and the choice between generic and brand-name drugs – Do margins affect choice?

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  • Maurus Rischatsch

    ()
    (Socioeconomic Institute, University of Zurich)

  • Maria Trottmann

    ()

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    Abstract

    Many politicians blame physician dispensing (PD) to increase health care expenditure and to undermine independence of drug prescription and income leading to a suboptimal medication. Therefore, PD is not allowed in most OECD countries. In Switzerland, PD is allowed in some regions depending on the density of pharmacies. This enables to investigate the difference in prescribing behavior between physician which gain income from prescribing a specific drug and their colleagues which prescribe the drug but do not sell it. Because the considered drugs are bioequivalent we focus on the economic consequence of PD. We analyze the prescribing behavior of Swiss physicians using cross-sectional data between 2005 and 2007 for three important agents. The results support our hypothesis that dispensing physicians have a higher probability of prescribing the drug with the (most likely) higher margin compared to non-dispensing physicians. Further, generic drugs are prescribed more often to patients with higher cost-sharing while patients' cost-sharing is less influential with PD. High-income patients face a much higher probability to receive the brand-name drug due to their lower marginal utility of income. Today's administered reimbursement prices for generics seem to be high enough to gain physicians for prescribing generics because of their high margins.

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    File URL: http://www.soi.uzh.ch/research/wp/2009/wp0911.pdf
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    Bibliographic Info

    Paper provided by Socioeconomic Institute - University of Zurich in its series SOI - Working Papers with number 0911.

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    Length: 14 pages
    Date of creation: Jul 2009
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    Handle: RePEc:soz:wpaper:0911

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    Keywords: Physician dispensing; prescribing behavior; generics; brand-name drugs;

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    Cited by:
    1. Liu, Ya-Ming & Yang, Yea-Huei Kao & Hsieh, Chee-Ruey, 2012. "Regulation and competition in the Taiwanese pharmaceutical market under national health insurance," Journal of Health Economics, Elsevier, Elsevier, vol. 31(3), pages 471-483.

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