Working Paper: NBER ID: w19186
Authors: Mariana Carrera; Dana Goldman; Geoffrey Joyce
Abstract: In this paper, we use individual level data on purchases of one of the most prescribed categories of drugs (cholesterol-lowering statins) to study the responses of physicians and patients to variation in the cost of drugs. In a sample of first-time statin prescriptions to employees from a group of Fortune 500 firms, we find that copay variation across plans has a relatively small effect on the choice of drug, and this effect does not vary with patient income. After the highly-publicized expiration of the patent for Zocor (simvastatin), however, prescriptions for this drug increased substantially, especially for lower-income patients. Our analysis suggests that physicians can perceive the adherence elasticity of their patients and adjust their initial prescriptions accordingly, but only in response to a large and universal price change. Using prescriber identifiers, we present suggestive evidence that physicians learn about a patient's price sensitivity through their own experience of prescribing to that patient.
Keywords: cost-sharing; cost-sensitivity; prescribing physician; statins
JEL Codes: I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| copay variation across plans (I13) | choice of drug (D87) |
| $10 decrease in Zocor's copay (D49) | 4 percentage point increase in prescribing share (I11) |
| patent expiration of Zocor (D45) | substantial increase in prescriptions for Zocor (I11) |
| physicians' past interactions with a patient (I11) | likelihood of prescribing lower-cost drugs (I11) |
| generic drug availability (L49) | prescriptions for lower-income patients (I14) |
| adherence rates for lower-income patients (I32) | prescribed lowest-cost drug (D45) |
| lower-income patients not receiving cost-sensitive prescriptions (I14) | insufficient responsiveness of prescriptions (I11) |