Are Physicians’ Prescribing Decisions Sensitive to Drug Prices? Evidence from a Free-Antibiotics Program

43 Pages Posted: 1 May 2010 Last revised: 7 Nov 2013

See all articles by Shanjun Li

Shanjun Li

Cornell University - School of Applied Economics and Management

Ramanan Laxminarayan

The Center for Disease Dynamics, Economics & Policy (CDDEP); Center for Disease Dynamics, Economics & Policy; Princeton University

Date Written: May 1, 2010

Abstract

This paper investigates whether patient-level factors, in particular cost considerations, affect physicians’ prescribing decisions. In the context of a natural experiment, we examine the effect of the first U.S. commercial free-antibiotics program on retail antibiotic sales using the difference-in-differences method. We find an overall increase in antibiotic prescriptions under the program as well as substitutions to covered antibiotics from not-covered antibiotics. The shift away from not-covered antibiotics, particularly from those that do not have covered equivalents indicates a change in 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.

Keywords: Antibiotics, Drug Resistance, Difference-in-Differences, Prescribing Decisions

JEL Classification: I10, L80

Suggested Citation

Li, Shanjun and Laxminarayan, Ramanan, Are Physicians’ Prescribing Decisions Sensitive to Drug Prices? Evidence from a Free-Antibiotics Program (May 1, 2010). Available at SSRN: https://ssrn.com/abstract=1598804 or http://dx.doi.org/10.2139/ssrn.1598804

Shanjun Li (Contact Author)

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

Ramanan Laxminarayan

The Center for Disease Dynamics, Economics & Policy (CDDEP) ( email )

1616 P St NW
Suite 600
Washington DC, DC 20036
United States

Center for Disease Dynamics, Economics & Policy ( email )

1616 P Street, NW
Washington, DC 20036
United States

HOME PAGE: http://www.cddep.org

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

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