Drug Firms' Payments and Physicians' Prescribing Behavior in Medicare Part D

49 Pages Posted: 18 Feb 2020 Last revised: 4 Feb 2023

See all articles by Colleen M. Carey

Colleen M. Carey

Cornell University - Department of Policy Analysis and Management

Ethan Lieber

University of Notre Dame

Sarah Miller

University of Michigan at Ann Arbor

Date Written: February 2020

Abstract

In a pervasive but controversial practice, drug firms frequently make monetary or in-kind payments to physicians in the course of promoting prescription drugs. We use a federal database on the universe of such payments between 2013 and 2015 linked to prescribing behavior in Medicare Part D. We account for the targeting of payments with fixed effects for each physician-drug combination. In an event study, we show that physicians increase prescribing of drugs for which they receive payments in the months just after payment receipt, with no evidence of differential trends between paid and unpaid physicians prior to the payment. Next, we examine five case studies of major drugs going off patent. Physicians receiving payments from the firms experiencing the patent expiry transition their patients just as quickly to generics as physicians who do not receive such payments. In addition, using hand-collected efficacy data on three major therapeutic classes, we show that drug quality is largely unaffected by the receipt of payments.

Suggested Citation

Carey, Colleen M. and Lieber, Ethan and Miller, Sarah, Drug Firms' Payments and Physicians' Prescribing Behavior in Medicare Part D (February 2020). NBER Working Paper No. w26751, Available at SSRN: https://ssrn.com/abstract=3539318

Colleen M. Carey (Contact Author)

Cornell University - Department of Policy Analysis and Management ( email )

Ithaca, NY
United States

Ethan Lieber

University of Notre Dame ( email )

361 Mendoza College of Business
Notre Dame, IN 46556-5646
United States

Sarah Miller

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

HOME PAGE: http://www-personal.umich.edu/~mille/

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