The Cost of Influence:How Gifts to Physicians Shape Prescriptions and Drug Costs

Melissa Newham () and Marica Valente

Working Papers from Faculty of Economics and Statistics, Universität Innsbruck

Abstract: This paper studies how gifts – monetary or in-kind payments – from drug firms to physicians in the US affect prescriptions and drug costs. We estimate heterogeneous treatment effects by combining physician-level data on antidiabetic prescriptions and payments with causal inference and machine learning methods.We find that payments cause physicians to prescribe more brand drugs, resulting in a cost increase of $ 30 per dollar received. Responses differ widely across physicians, and are primarily explained by variation in patients’ out-of-pocket costs. A gift ban is estimated to decrease drug costs by 3-4 %. Taken together, these novel findings reveal how payments shape prescription choices and drive up costs.

Keywords: public health; payments to physicians; gift ban; heterogeneous treatment effects; causal machine learning (search for similar items in EconPapers)
JEL-codes: I11 I18 M31 (search for similar items in EconPapers)
Pages: 53
Date: 2023-03
New Economics Papers: this item is included in nep-big, nep-cmp and nep-law
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https://www2.uibk.ac.at/downloads/c9821000/wpaper/2023-03.pdf (application/pdf)

Related works:
Working Paper: The Cost of Influence: How Gifts to Physicians Shape Prescriptions and Drug Costs (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2023-03

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