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Off‐Label Use of Pharmaceuticals: A Detection Controlled Estimation Approach

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  • W. David Bradford
  • John L. Turner
  • Jonathan W. Williams

Abstract

We identify the rate of off‐label use of prescription drugs in the United States during 1993‐2008 using Detection Controlled Estimation. We find that the rate rises from 29.9% to 38.3% during this period. Off‐label prescribing increases when there are fewer FDA‐approved alternatives and a patient’s insurance has less restrictive formularies and lower copayments. The temporal increase in off‐label use coincides with a surge in settlements of Department of Justice (DOJ) lawsuits for off‐label marketing. Those drugs targeted by the DOJ have 4.6% higher rates of off‐label use initially, but the rate decreases 10.2% after the company becomes aware of the suit. The welfare effects of such regulatory intervention are unclear because we find off‐label prescribing patterns by physicians that are consistent with enhancement of patient welfare.

Suggested Citation

  • W. David Bradford & John L. Turner & Jonathan W. Williams, 2018. "Off‐Label Use of Pharmaceuticals: A Detection Controlled Estimation Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 66(4), pages 866-903, December.
    • Handle: RePEc:bla:jindec:v:66:y:2018:i:4:p:866-903
    DOI: 10.1111/joie.12189
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    Cited by:

    1. Jeon, Sung-Hee & Pohl, R. Vincent, 2019. "Medical innovation, education, and labor market outcomes of cancer patients," Journal of Health Economics, Elsevier, vol. 68(C).
    2. Tuncel, Tuba, 2022. "Should We Prevent Off-Label Drug Prescriptions? Empirical Evidence from France," TSE Working Papers 22-1383, Toulouse School of Economics (TSE).
    3. M. Paula Fitzgerald & Farnoush Reshadi & Matthew Sarkees, 2022. "Patient susceptibility to over‐trust: The case of off‐label prescribing," Journal of Consumer Affairs, Wiley Blackwell, vol. 56(2), pages 849-875, June.
    4. Katharina E. Blankart & Frank R. Lichtenberg, 2022. "The Effects of Off-label Drug Use on Disability and Medical Expenditure," NBER Working Papers 30440, National Bureau of Economic Research, Inc.

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