The Effect of Information Disclosure on Industry Payments to Physicians

58 Pages Posted: 6 Nov 2017 Last revised: 25 Sep 2020

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: September 8, 2017

Abstract

In 2019, U.S. pharmaceutical companies paid $3.6 billion to physicians in the form of gifts to promote their drugs. The practice of offering financial incentives has raised concerns about potential conflict of interest. To curb such inappropriate financial relationships between healthcare providers and firms, several states have instituted disclosure laws wherein firms were required to publicly declare the payments that they made to physicians. In 2013, this law was rolled out to all 50 states as part of the Affordable Care Act. The authors investigate the causal impact of this increased transparency on subsequent payments between firms and physicians. While firms and physicians were informed of the disclosure regulation at data collection, complete transparency did not occur until the data were published online. The authors estimate the causal impact of the online data disclosure by exploiting the phased rollout of the disclosure laws across states. They use a quasi-experimental difference-in-difference research design to find control ``clones'' for every physician-product pair in the states with and without prior disclosure laws, facilitated by recent advances in machine learning methods. Using a 29-month national panel covering $100 million in payments between 16 anti-diabetics brands and 50,000 physicians, the authors find that the monthly payments changed insignificantly on average due to disclosure. However, the average null effect masks some unintended consequences of disclosure, where payments may have gone up for more expensive drugs and among physicians who prescribed more heavily. Interestingly, more popular physicians and heavier prescribers continue to receive high consulting and speaker fees after the disclosure. The authors further explore potential mechanisms that can parsimoniously describe the data pattern.

Keywords: Information Disclosure, Causal Inference, Machine Learning, Causal Forest, Heterogeneous Treatment Effect, Public Policy, Quasi-Experiment, Pharmaceutical Marketing, Physician Payments

JEL Classification: M31, M38, C31, C54, C55, I18,K20

Suggested Citation

Guo, Tong and Sriram, S. and Manchanda, Puneet, The Effect of Information Disclosure on Industry Payments to Physicians (September 8, 2017). Available at SSRN: https://ssrn.com/abstract=3064769 or http://dx.doi.org/10.2139/ssrn.3064769

Tong Guo (Contact Author)

Duke University, Fuqua School of Business ( email )

100 Fuqua Dr
Durham, NC 27708
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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