IDEAS home Printed from https://ideas.repec.org/a/wly/hlthec/v24y2015i2p158-174.html
   My bibliography  Save this article

Are Physicians' Prescribing Decisions Sensitive to Drug Prices? Evidence from a Free‐antibiotics Program

Author

Listed:
  • Shanjun Li
  • Ramanan Laxminarayan

Abstract

This paper investigates whether patient‐level factors, in particular cost considerations, affect the physicians' prescribing decisions. In the context of a natural experiment, we examine the effect of the first US commercial free‐antibiotics program on retail antibiotic sales. We find an overall increase in antibiotic prescriptions under the program and substitutions to covered antibiotics from not‐covered antibiotics. The shift away from not‐covered antibiotics, particularly from those without covered equivalents, indicates a change in the physicians' prescribing decisions. We locate stronger program effects in low‐income areas. Our findings, robust to a variety of specifications, are in contrast with previous literature. Copyright © 2013 John Wiley & Sons, Ltd.

Suggested Citation

  • Shanjun Li & Ramanan Laxminarayan, 2015. "Are Physicians' Prescribing Decisions Sensitive to Drug Prices? Evidence from a Free‐antibiotics Program," Health Economics, John Wiley & Sons, Ltd., vol. 24(2), pages 158-174, February.
    • Handle: RePEc:wly:hlthec:v:24:y:2015:i:2:p:158-174
    DOI: 10.1002/hec.3008
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/hec.3008
    Download Restriction: no
    File URL: https://libkey.io/10.1002/hec.3008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February.
    2. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(2), pages 605-637.
    3. Kennedy, Peter E, 1981. "Estimation with Correctly Interpreted Dummy Variables in Semilogarithmic Equations [The Interpretation of Dummy Variables in Semilogarithmic Equations]," American Economic Review, American Economic Association, vol. 71(4), pages 801-801, September.
    4. Y. Richard Wang & Mark V. Pauly, 2005. "Spillover Effects of Restrictive Drug Formularies on Physician Prescribing Behavior: Evidence from Medicaid," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 755-773, September.
    5. Glied, Sherry & Zivin, Joshua Graff, 2002. "How do doctors behave when some (but not all) of their patients are in managed care?," Journal of Health Economics, Elsevier, vol. 21(2), pages 337-353, March.
    6. Coscelli, Andrea, 2000. "The Importance of Doctors' and Patients' Preferences in the Prescription Decision," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 349-369, September.
    7. Rosenthal Meredith B. & Berndt Ernst R. & Donohue Julie M. & Epstein Arnold M. & Frank Richard G., 2003. "Demand Effects of Recent Changes in Prescription Drug Promotion," Forum for Health Economics & Policy, De Gruyter, vol. 6(1), pages 1-28, January.
    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. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    10. Grabowski, Henry G & Vernon, John M, 1992. "Brand Loyalty, Entry, and Price Competition in Pharmaceuticals after the 1984 Drug Act," Journal of Law and Economics, University of Chicago Press, vol. 35(2), pages 331-350, October.
    11. Heckman, J.J. & Hotz, V.J., 1988. "Choosing Among Alternative Nonexperimental Methods For Estimating The Impact Of Social Programs: The Case Of Manpower Training," University of Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
    12. Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2005. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 83-120, February.
    13. Jonathan Skinner & Douglas Staiger, 2007. "Technology Adoption from Hybrid Corn to Beta-Blockers," NBER Chapters, in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 545-570, National Bureau of Economic Research, Inc.
    14. Thomas Barrios & Rebecca Diamond & Guido W. Imbens & Michal Kolesár, 2012. "Clustering, Spatial Correlations, and Randomization Inference," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 107(498), pages 578-591, June.
    15. Toshiaki Iizuka & Ginger Z. Jin, 2007. "Direct To Consumer Advertising And Prescription Choice," Journal of Industrial Economics, Wiley Blackwell, vol. 55(4), pages 771-771, December.
    16. Meredith B. Rosenthal & Ernst R. Berndt & Julie M. Donohue & Arnold M. Epstein & Richard G. Frank, 2003. "Demand Effects of Recent Changes in Prescription Drug Promotion," NBER Chapters, in: Frontiers in Health Policy Research, Volume 6, pages 1-26, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lu-Yi Qiu & Ling-Yun He, 2017. "Can Green Traffic Policies Affect Air Quality? Evidence from A Difference-in-Difference Estimation in China," Sustainability, MDPI, vol. 9(6), pages 1-10, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qi Sun & Fang Wu, 2016. "Warranty regulation and consumer demand: evidence from China’s automobile market," Journal of Regulatory Economics, Springer, vol. 49(2), pages 152-171, April.
    2. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    3. Kaiser, Ulrich & Mendez, Susan J. & Rønde, Thomas & Ullrich, Hannes, 2014. "Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark," Journal of Health Economics, Elsevier, vol. 36(C), pages 174-187.
    4. Herr, A. & Suppliet, M., 2011. "Co-Payment Exemptions and Reference Prices: an Empirical Study of Pharmaceutical Prices in Germany," Health, Econometrics and Data Group (HEDG) Working Papers 11/18, HEDG, c/o Department of Economics, University of York.
    5. Hosken, Daniel & Wendling, Brett, 2013. "Informing the uninformed: How drug advertising affects check-up visits," International Journal of Industrial Organization, Elsevier, vol. 31(2), pages 181-194.
    6. Toshiaki Iizuka, 2004. "What Explains the Use of Direct‐to‐Consumer Advertising of Prescription Drugs?," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 349-379, September.
    7. Dhaval M. Dave, 2013. "Effects of Pharmaceutical Promotion: A Review and Assessment," NBER Working Papers 18830, National Bureau of Economic Research, Inc.
    8. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484, National Bureau of Economic Research, Inc.
    9. Brekke, Kurt R. & Holmas, Tor Helge & Straume, Odd Rune, 2011. "Reference pricing, competition, and pharmaceutical expenditures: Theory and evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 95(7), pages 624-638.
    10. Brekke, Kurt Richard & Holmås, Tor Helge & Straume, Odd Rune, 2013. "Margins and market shares: Pharmacy incentives for generic substitution," European Economic Review, Elsevier, vol. 61(C), pages 116-131.
    11. Makoto Kakinaka & Ryuta Kato, 2013. "Regulated medical fee schedule of the Japanese health care system," International Journal of Health Economics and Management, Springer, vol. 13(3), pages 301-317, December.
    12. Brian Bell & Richard Blundell & John Reenen, 1999. "Getting the Unemployed Back to Work: The Role of Targeted Wage Subsidies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 339-360, August.
    13. Anusua Datta & Dhaval Dave, 2017. "Effects of Physician‐directed Pharmaceutical Promotion on Prescription Behaviors: Longitudinal Evidence," Health Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 450-468, April.
    14. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    15. Dmitry Arkhangelsky & Guido Imbens, 2023. "Causal Models for Longitudinal and Panel Data: A Survey," Papers 2311.15458, arXiv.org, revised Mar 2024.
    16. Toshiaki Iizuka & Ginger Zhe Jin, 2005. "Drug Advertising and Health Habit," NBER Working Papers 11770, National Bureau of Economic Research, Inc.
    17. Amrita Bhattacharyya, 2005. "Advertising in Specialized Markets: Example from the US Pharmaceutical Industry," Boston College Working Papers in Economics 610, Boston College Department of Economics, revised 10 Nov 2005.
    18. Daniel Albalate, 2008. "Lowering blood alcohol content levels to save lives: The European experience," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(1), pages 20-39.
    19. Lu-Yi Qiu & Ling-Yun He, 2017. "Can Green Traffic Policies Affect Air Quality? Evidence from A Difference-in-Difference Estimation in China," Sustainability, MDPI, vol. 9(6), pages 1-10, June.
    20. Jones A.M & Rice N, 2009. "Econometric Evaluation of Health Policies," Health, Econometrics and Data Group (HEDG) Working Papers 09/09, HEDG, c/o Department of Economics, University of York.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:24:y:2015:i:2:p:158-174. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/5749 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.