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

38 Pages Posted: 28 May 2020

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

Multiple version iconThere are 2 versions of this paper

Date Written: December 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 that 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.

Suggested Citation

Bradford, W. David and Turner, John L. and Williams, Jonathan W., Off‐Label Use of Pharmaceuticals: A Detection Controlled Estimation Approach (December 2018). The Journal of Industrial Economics, Vol. 66, Issue 4, pp. 866-903, 2018, Available at SSRN: https://ssrn.com/abstract=3609414 or http://dx.doi.org/10.1111/joie.12189

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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