Working Paper: NBER ID: w26751
Authors: Colleen Carey; Ethan M.J. Lieber; Sarah Miller
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.
Keywords: Drug Firms; Payments; Physicians; Prescribing Behavior; Medicare Part D
JEL Codes: D83; I11; L15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Drug firm payments (J33) | Physicians' prescribing behavior (I11) |
| Drug firm payments (J33) | Total days supplied of promoted drugs (Y10) |
| Drug firm payments (J33) | Total expenditure on prescribed drugs (H51) |
| Drug firm payments (J33) | Transition to generic drugs (L65) |
| Drug firm payments (J33) | Efficacy of prescribed drugs (I12) |