'Let the Sun Shine in': The Impact of Industry Payment Disclosure on Physician Prescription Behavior

53 Pages Posted: 17 Apr 2017 Last revised: 10 Apr 2019

See all articles by Tong Guo

Tong Guo

Duke University, Fuqua School of Business

S. Sriram

The Stephen M. Ross School of Business at the University of Michigan

Puneet Manchanda

University of Michigan, Stephen M. Ross School of Business

Date Written: February 25, 2019

Abstract

U.S. pharmaceutical companies frequently pay doctors to promote their drugs. This has raised concerns about conflict of interest, which policy-makers have attempted to address by introducing payment disclosure laws. However, it is unclear if such disclosure has an effect on physician prescription behavior. We use individual-level claims data from a major provider of health insurance in the U.S. and employ a difference-in-differences research design to study the effect of the payment disclosure law introduced in Massachusetts in June 2009. The research design exploits the fact that while physicians operating in Massachusetts were impacted by the legislation, their counterparts in the neighboring states of Connecticut, New York, New Hampshire, and Rhode Island were not. In order to keep the groups of physicians comparable, we restrict our analysis to physicians in the counties that are on the border of these states. We find that the Massachusetts disclosure law resulted in a decline in prescriptions in all three drug classes studied: statins, antidepressants, and antipsychotics. Our findings are robust to alternative control groups, time periods and estimation methods. We also show that the effect is highly heterogeneous across physician groups. Finally, we explore potential mechanisms driving these results.

Keywords: Pharmaceutical Marketing, Physician Payments, Disclosure, Causal Inference, Difference-In-Difference, Generalized Synthetic Control, Sunshine Law, Public Policy, Quasi-Experiment

JEL Classification: M30, M31, M38, H75, I11, I18

Suggested Citation

Guo, Tong and Sriram, S. and Manchanda, Puneet, 'Let the Sun Shine in': The Impact of Industry Payment Disclosure on Physician Prescription Behavior (February 25, 2019). Available at SSRN: https://ssrn.com/abstract=2953399 or http://dx.doi.org/10.2139/ssrn.2953399

Tong Guo (Contact Author)

Duke University, Fuqua School of Business ( email )

United States

S. Sriram

The Stephen M. Ross School of Business at the University of Michigan ( email )

Ann Arbor, MI 48109
United States

Puneet Manchanda

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-936-2445 (Phone)
734-936-8716 (Fax)

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