Do Physicians Respond to the Costs and Cost-Sensitivity of Their Patients?†

Do Physicians Respond to the Costs and Cost-Sensitivity of Their Patients?† AbstractWe use individual level data on purchases of cholesterol-lowering drugs 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 12 Fortune 500 firms, we find that co-pay variation across plans has a small effect on the choice of drug, and this effect does not vary with patient income. After the highly publicized patent expiration of Zocor, however, prescriptions for this drug increased substantially, especially for lower income patients. Our analysis suggests that physicians can perceive the price sensitivity of their patients and adjust their initial prescriptions accordingly, but only in response to a large and universal price change. (JEL D14, G22, I11, I13, L65) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Economic Policy American Economic Association

Do Physicians Respond to the Costs and Cost-Sensitivity of Their Patients?†

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Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7731
D.O.I.
10.1257/pol.20150523
Publisher site
See Article on Publisher Site

Abstract

AbstractWe use individual level data on purchases of cholesterol-lowering drugs 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 12 Fortune 500 firms, we find that co-pay variation across plans has a small effect on the choice of drug, and this effect does not vary with patient income. After the highly publicized patent expiration of Zocor, however, prescriptions for this drug increased substantially, especially for lower income patients. Our analysis suggests that physicians can perceive the price sensitivity of their patients and adjust their initial prescriptions accordingly, but only in response to a large and universal price change. (JEL D14, G22, I11, I13, L65)

Journal

American Economic Journal: Economic PolicyAmerican Economic Association

Published: Feb 1, 2018

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