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

Author

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  • Tuba Tunçel

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

After a drug obtains marketing authorization, the usage depends on the regulation of off-label prescriptions for unapproved indications. We investigate the impact of off-label prescription regulation on physicians' behavior, 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 nine 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, 2024. "Should We Prevent Off-Label Drug Prescriptions? Empirical Evidence from France," Post-Print hal-04758877, HAL.
    • Handle: RePEc:hal:journl:hal-04758877
    DOI: 10.1093/restud/rdae060
    Note: View the original document on HAL open archive server: https://hal.science/hal-04758877v1
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    References listed on IDEAS

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    4. Leemore Dafny & Kate Ho & Edward Kong, 2024. "How Do Copayment Coupons Affect Branded Drug Prices and Quantities Purchased?," American Economic Journal: Economic Policy, American Economic Association, vol. 16(3), pages 314-346, August.
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