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Information technology and agency in physicians' prescribing decisions

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  • Andrew J. Epstein
  • Jonathan D. Ketcham

Abstract

type="main"> Patients rely on physicians to act as their agents when prescribing medications, yet the efforts of pharmaceutical manufacturers and prescription drug insurers may alter this agency relationship. We evaluate how formularies, and the use of information technology (IT) that provides physicians with formulary information, influence prescribing. We combine data from a randomized experiment of physicians with secondary data to eliminate bias due to patient, physician, drug, and insurance characteristics. We find that when given formulary IT, physicians' prescribing decisions are influenced by formularies far more than by pharmaceutical firms' detailing and sampling. Without IT, however, formularies' effects are much smaller.

Suggested Citation

  • Andrew J. Epstein & Jonathan D. Ketcham, 2014. "Information technology and agency in physicians' prescribing decisions," RAND Journal of Economics, RAND Corporation, vol. 45(2), pages 422-448, June.
    • Handle: RePEc:bla:randje:v:45:y:2014:i:2:p:422-448
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    Cited by:

    1. Herr, A. & Suppliet, M., 2011. "Co-Payment Exemptions and Reference Prices: an Empirical Study of Pharmaceutical Prices in Germany," Health, Econometrics and Data Group (HEDG) Working Papers 11/18, HEDG, c/o Department of Economics, University of York.
    2. Margaret K. Kyle, 2019. "The Alignment of Innovation Policy and Social Welfare: Evidence from Pharmaceuticals," NBER Chapters, in: Innovation Policy and the Economy, Volume 20, pages 95-123, National Bureau of Economic Research, Inc.
    3. Suppliet, Moritz & Herr, Annika, 2016. "Cost-Sharing and Drug Pricing Strategies : Introducing Tiered Co-Payments in Reference Price Markets," Other publications TiSEM 4d692f0e-8577-4392-b413-2, Tilburg University, School of Economics and Management.
    4. Newham, Melissa & Valente, Marica, 2024. "The cost of influence: How gifts to physicians shape prescriptions and drug costs," Journal of Health Economics, Elsevier, vol. 95(C).
    5. Tianyan Hu & Sandra L. Decker & Shin-Yi Chou, 2017. "The impact of health insurance expansion on physician treatment choice: Medicare Part D and physician prescribing," International Journal of Health Economics and Management, Springer, vol. 17(3), pages 333-358, September.
    6. Zhu, Z.;, 2023. "The Value of Patients: Heterogenous Physician Learning and Generic Drug Diffusion," Health, Econometrics and Data Group (HEDG) Working Papers 23/12, HEDG, c/o Department of Economics, University of York.
    7. Suppliet, Moritz, 2020. "Umbrella branding in pharmaceutical markets," Journal of Health Economics, Elsevier, vol. 73(C).
    8. Kyle, Margaret K., 2022. "Incentives for pharmaceutical innovation: What’s working, what’s lacking," International Journal of Industrial Organization, Elsevier, vol. 84(C).
    9. Carey, Colleen & Lieber, Ethan M.J. & Miller, Sarah, 2021. "Drug firms’ payments and physicians’ prescribing behavior in Medicare Part D," Journal of Public Economics, Elsevier, vol. 197(C).
    10. Avdic, Daniel & Blankart, Katharina, 2021. "A Hard Look at “Soft” Cost‐control Measures in Healthcare Organizations: Evidence from Preferred Drug Policies in Germany," CINCH Working Paper Series (since 2020) 74978, Duisburg-Essen University Library, DuEPublico.

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