Off-Label Use of Pharmaceuticals: A Detection Controlled Estimation Approach

47 Pages Posted: 23 Apr 2013 Last revised: 1 Jun 2018

See all articles by W. David Bradford

W. David Bradford

University of Georgia - Department of Public Administration and Policy; University of Georgia - Department of Economics

John L. Turner

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Jonathan W. Williams

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Date Written: May 24, 2018

Abstract

We identify the rate of off-label use of prescription drugs in the United States during 1993-2008 using Detection Controlled Estimation. We find the rate rises from 29.9% to 38.3% during this period. Off-label prescribing increases when there are fewer FDA-approved alternatives and a patient's insurance has less restrictive formularies and lower copayments. The temporal increase in off-label use coincides with a surge in settlements of Department of Justice (DOJ) lawsuits for off-label marketing. Those drugs targeted by the DOJ have 4.6% higher rates of off-label use initially, but the rate decreases 10.2% after the company becomes aware of the suit. The welfare effects of such regulatory intervention are unclear because we find off-label prescribing patterns by physicians that are consistent with enhancement of patient welfare.

Keywords: off-label use, pharmaceuticals, detection controlled estimation

JEL Classification: C1, L51, I10, I18, I13, K23

Suggested Citation

Bradford, W. David and Turner, John L. and Williams, Jonathan W., Off-Label Use of Pharmaceuticals: A Detection Controlled Estimation Approach (May 24, 2018). Available at SSRN: https://ssrn.com/abstract=2230976 or http://dx.doi.org/10.2139/ssrn.2230976

W. David Bradford (Contact Author)

University of Georgia - Department of Public Administration and Policy ( email )

Athens, GA 30602-6254
United States

University of Georgia - Department of Economics ( email )

Athens, GA 30602-6254
United States

John L. Turner

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602-6254
United States

Jonathan W. Williams

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

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