Mandatory Disclosure: Theory and Evidence from Industry-Physician Relationships

50 Pages Posted: 2 Mar 2016 Last revised: 11 Feb 2019

See all articles by Daniel L. Chen

Daniel L. Chen

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France

Vardges Levonyan

ETH Zürich

S. Reinhart

University of Chicago

Glen Taksler

Cleveland Clinic

Date Written: February 10, 2019

Abstract

The interaction of disclosure laws and the targeted behavior is typically unknown since data on disclosed activity rarely exist in the absence of disclosure laws. We exploit data from legal settlements disclosing $316 million in pharmaceutical company payments to 316,622 physicians across the U.S. from 2009-2011. States were classified as having strong, weak, or no disclosure based on whether data were reported only to state authorities (weak) or were publicly available (strong). Strong disclosure law was associated with reduced payments among doctors accepting less than $100 and increased payments among doctors accepting greater than $100. Weak disclosure states, despite imposing administrative compliance costs to industry, were indistin- guishable from no disclosure states. This result suggests that the primary mechanism for fewer small payments in strong disclosure states was physicians’ reduced willingness to accept payments rather than the imposition of significant administrative costs on industry. We conduct additional analysis holding fixed the cost for pharmaceutical companies of disclosing data, which was possible because Massachusetts began releasing payment data online during our sample period. Differences-in-differences analyses and multiple regression yield similar estimates for each pay- ment category: Mandatory disclosure reduced payments for speaking and for meals but increased payments for consulting activities. Differences-in-discontinuities in distribution of payments at the disclosure threshold among strong and weak disclosure states support the interpretation of physicians’ reduced willingness to accept payments. Significant disclosure aversion reducing con- flicts of interest is consistent with the policy goals of mandatory disclosure, though the increased payments among those receiving large payments may have been unintended.

















Keywords: Physician Payment, Conflicts of Interest, Ethics

JEL Classification: K23, I18

Suggested Citation

Chen, Daniel L. and Levonyan, Vardges and Reinhart, S. and Taksler, Glen, Mandatory Disclosure: Theory and Evidence from Industry-Physician Relationships (February 10, 2019). Available at SSRN: https://ssrn.com/abstract=2740559 or http://dx.doi.org/10.2139/ssrn.2740559

Daniel L. Chen (Contact Author)

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France ( email )

21 allée de Brienne
31015 Toulouse cedex 6 France
Toulouse, 31015
France

Vardges Levonyan

ETH Zürich ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015
Switzerland

S. Reinhart

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Glen Taksler

Cleveland Clinic ( email )

9500 Euclid Ave.
Cleveland, OH 44195
United States

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