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Should We Prevent Off-Label Drug Prescriptions? Empirical Evidence from France

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  • Tuba Tunçel

Abstract

After a drug obtains marketing authorisation, the usage depends on the regulation of off-label prescriptions for unapproved indications. We investigate the impact of off-label prescription regulation on physicians’ behaviour, patients’ health, treatment costs, and pharmaceutical firms’ pricing with a structural demand and supply model. Exploiting rich panel data on physicians’ activities and office visits in France over 9 years, we use a model of prescription choice and health outcomes with unobserved patient-level heterogeneity. We identify the demand for on-label and off-label drugs and the effect of prescription choice on health outcomes. On the supply side, we use a Nash-in-Nash bargaining model between the government and the pharmaceutical companies that allows the partial identification of the marginal costs of drugs. Counterfactual simulations show that when we remove off-label drugs from the choice set of physicians, substitution to on-label drugs at constant prices would lead to an increase of 15% in the expenditure on prescription drugs. If we allow bargaining adjustment on drug prices under a ban on off-label prescriptions, the ban would further increase the treatment cost, by 26%, without improving health outcomes.

Suggested Citation

  • Tuba Tunçel, 2025. "Should We Prevent Off-Label Drug Prescriptions? Empirical Evidence from France," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 92(3), pages 2027-2070.
    • Handle: RePEc:oup:restud:v:92:y:2025:i:3:p:2027-2070.
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    File URL: http://hdl.handle.net/10.1093/restud/rdae060
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