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Does Physician Dispensing Increase Drug Expenditures?

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  • Boris Kaiser
  • Christian Schmid

Abstract

We analyze whether the possibility for physicians to dispense drugs increases health care expenditures due to the incentives created by the markup on drugs sold. Using comprehensive physician-level data from Switzerland, we exploit the fact that there is regional variation in the dispensing regime to estimate policy effects. The empirical strategy consists of doubly-robust estimation which combines inverse-probability weighting with regression. Our main finding suggests that if dispensing is permitted, physicians produce significantly higher drug costs in the order of 30% per patient.

Suggested Citation

  • Boris Kaiser & Christian Schmid, 2013. "Does Physician Dispensing Increase Drug Expenditures?," Diskussionsschriften dp1303, Universitaet Bern, Departement Volkswirtschaft.
    • Handle: RePEc:ube:dpvwib:dp1303
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    References listed on IDEAS

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    1. Richard K. Crump & V. Joseph Hotz & Guido W. Imbens & Oscar A. Mitnik, 2009. "Dealing with limited overlap in estimation of average treatment effects," Biometrika, Biometrika Trust, vol. 96(1), pages 187-199.
    2. Filippini, M. & Heimsch, F. & Masiero, G., 2014. "Antibiotic consumption and the role of dispensing physicians," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 242-251.
    3. 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.
    4. Toshiaki Iizuka, 2007. "Experts' agency problems: evidence from the prescription drug market in Japan," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 844-862, September.
    5. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
    6. Labelle, Roberta & Stoddart, Greg & Rice, Thomas, 1994. "A re-examination of the meaning and importance of supplier-induced demand," Journal of Health Economics, Elsevier, vol. 13(3), pages 347-368, October.
    7. Luca Crivelli & Massimo Filippini & Ilaria Mosca, 2006. "Federalism and regional health care expenditures: an empirical analysis for the Swiss cantons," Health Economics, John Wiley & Sons, Ltd., vol. 15(5), pages 535-541.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. #HEJC papers for September 2013
      by academichealtheconomists in The Academic Health Economists' Blog on 2013-09-01 04:01:38

    Citations

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    Cited by:

    1. Daniel Burkhard & Christian Schmid & Kaspar Wüthrich, 2015. "Financial incentives and physician prescription behavior: Evidence from dispensing regulations," Diskussionsschriften dp1511, Universitaet Bern, Departement Volkswirtschaft.
    2. Matthias Bannert & David Iselin, 2015. "Ask Your Doctor or Pharmacist! On the Effect of Self-Dispensing Physicians on Pharmaceutical Coverage," KOF Working papers 15-387, KOF Swiss Economic Institute, ETH Zurich.
    3. Stefan Meyer, 2016. "Dispensing physicians, asymmetric information supplier-induced demand: evidence from the Swiss Health Survey," International Journal of Health Economics and Management, Springer, vol. 16(3), pages 215-245, September.

    More about this item

    Keywords

    Health Care Costs; Drug Expenditures; Physician Dispensing; Supply-induced Demand; Treatment Effects;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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