Off-Label Use of Pharmaceuticals: A Detection Controlled Estimation Approach
37 Pages Posted: 23 Apr 2013 Last revised: 13 Mar 2015
Date Written: March 2015
We identify the rate of off-label use of prescription drugs in the United States during 1993-2008. We apply Detection Controlled Estimation to a comprehensive cross-section of prescriptions and find that rates of off-label use rise from 30.2% to 39.1% during this period. This coincides with a surge in settlements of Department of Justice lawsuits for off-label marketing. Additionally, physicians are more likely to prescribe off-label when there are fewer FDA-approved alternatives and when a patient’s insurance has less restrictive formularies and lower copayments. These substitution patterns are consistent with off-label prescribing by physicians that enhances the welfare of patients.
Keywords: off-label use, pharmaceuticals, detection controlled estimation
JEL Classification: C1, L51, I10, I18, I13, K23
Suggested Citation: Suggested Citation