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Generic substitution, financial interests, and imperfect agency

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  • Maurus Rischatsch

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  • Maria Trottmann

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  • Peter Zweifel

Abstract

Policy makers around the world seek to encourage generic substitution. In this paper, the importance of prescribing physicians’ imperfect agency is tested using the fact that some Swiss jurisdictions allow physicians to dispense drugs on their own account (physician dispensing, PD) while others disallow it. We estimate a model of physician drug choice with the help of drug claim data, finding a significant positive association between PD and the use of generics. While this points to imperfect agency, generics are prescribed more often to patients with high copayments or low incomes. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Maurus Rischatsch & Maria Trottmann & Peter Zweifel, 2013. "Generic substitution, financial interests, and imperfect agency," International Journal of Health Economics and Management, Springer, vol. 13(2), pages 115-138, June.
  • Handle: RePEc:kap:ijhcfe:v:13:y:2013:i:2:p:115-138
    DOI: 10.1007/s10754-013-9126-5
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    References listed on IDEAS

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    1. Griliches, Zvi & Cockburn, Iain, 1994. "Generics and New Goods in Pharmaceutical Price Indexes," American Economic Review, American Economic Association, vol. 84(5), pages 1213-1232, December.
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    4. Liu, Ya-Ming & Yang, Yea-Huei Kao & Hsieh, Chee-Ruey, 2009. "Financial incentives and physicians' prescription decisions on the choice between brand-name and generic drugs: Evidence from Taiwan," Journal of Health Economics, Elsevier, vol. 28(2), pages 341-349, March.
    5. 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.
    6. Vatter, Adrian & R efli, Christian, 2003. "Do Political Factors Matter for Health Care Expenditure? A Comparative Study of Swiss Cantons," Journal of Public Policy, Cambridge University Press, vol. 23(03), pages 301-323, September.
    7. Joanne Garrett, 1997. "Odds ratios and confidence intervals for logistic regression models with effect modification," Stata Technical Bulletin, StataCorp LP, vol. 6(36).
    8. Andersson, Karolina & Bergstrom, Gina & Petzold, Max G. & Carlsten, Anders, 2007. "Impact of a generic substitution reform on patients' and society's expenditure for pharmaceuticals," Health Policy, Elsevier, vol. 81(2-3), pages 376-384, May.
    9. Zweifel, Peter, 1985. "Technology in ambulatory medical care: Cost increasing or cost saving?," Social Science & Medicine, Elsevier, vol. 21(10), pages 1139-1151, January.
    10. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
    11. Peter Zweifel & Ming Tai-Seale, 2009. "An economic analysis of payment for health care services: The United States and Switzerland compared," International Journal of Health Economics and Management, Springer, vol. 9(2), pages 197-210, June.
    12. De Jaegher, Kris & Jegers, Marc, 2000. "A model of physician behaviour with demand inducement," Journal of Health Economics, Elsevier, vol. 19(2), pages 231-258, March.
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    Citations

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    Cited by:

    1. Aida Isabel Tavares, 0. "Generic substitution policy, an incentive approach," Computational and Mathematical Organization Theory, Springer, vol. 0, pages 1-22.
    2. Peter Zweifel & Katharina Janus, 2017. "Medical ethics: enhanced or undermined by modes of payment?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(1), pages 119-129, January.
    3. Maurus Rischatsch, 2014. "Lead me not into temptation: drug price regulation and dispensing physicians in Switzerland," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(7), pages 697-708, September.
    4. Skipper, Niels & Vejlin, Rune, 2015. "Determinants of generic vs. brand drug choice: Evidence from population-wide Danish data," Social Science & Medicine, Elsevier, vol. 130(C), pages 204-215.
    5. repec:spr:comaot:v:23:y:2017:i:2:d:10.1007_s10588-016-9223-3 is not listed on IDEAS
    6. Schumacher, Heiner & Kesternich, Iris & Kosfeld, Michael & Winter, Joachim, 2014. "Us and Them: Distributional Preferences in Small and Large Groups," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 453, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    7. Katharina Elisabeth Fischer & Tom Stargardt, 2016. "The diffusion of generics after patent expiry in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(8), pages 1027-1040, November.
    8. Alexander Ahammer & Ivan Zilic, 2017. "Do Financial Incentives Alter Physician Prescription Behavior? Evidence from Random Patient-GP Allocations," Working Papers 1701, The Institute of Economics, Zagreb.
    9. Rischatsch, Maurus, 2015. "Who joins the network? Physicians’ resistance to take budgetary co-responsibility," Journal of Health Economics, Elsevier, vol. 40(C), pages 109-121.
    10. Zweifel, Peter & Janus, Katharina, 2016. "Physician ethics: undermined or enhanced by modes of payment?," Annual Conference 2016 (Augsburg): Demographic Change 145708, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Physician agency; Prescribing behavior; Drug dispensing; Generic substitution; Brand-name drugs; I10; I18; I19;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I19 - Health, Education, and Welfare - - Health - - - Other

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