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Drug Firms' Payments and Physicians' Prescribing Behavior in Medicare Part D

Colleen Carey, Ethan Lieber () and Sarah Miller

No 26751, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D83 I11 L15 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-hea
Note: HC
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Published as Colleen Carey & Ethan M.J. Lieber & Sarah Miller, 2021. "Drug firms’ payments and physicians’ prescribing behavior in Medicare Part D," Journal of Public Economics, vol 197.

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