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Physicians prescribing originals causes welfare losses

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  • Granlund, David
  • Sundström, David

Abstract

We analyze 319,000 choices of medically equivalent drugs at Swedish pharmacies. The results show that patients dislike substitutions for the prescribed product and that this effect is larger when the prescribed product is an original. At the same time, patients have strong preferences to buy the cheapest generic product. This implies that patients in most cases buy the cheapest generic product and experience welfare losses when the physician has prescribed another product.

Suggested Citation

  • Granlund, David & Sundström, David, 2018. "Physicians prescribing originals causes welfare losses," Economics Letters, Elsevier, vol. 170(C), pages 143-146.
    • Handle: RePEc:eee:ecolet:v:170:y:2018:i:c:p:143-146
    DOI: 10.1016/j.econlet.2018.06.017
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    Cited by:

    1. David Granlund, 2021. "A New Approach to Estimating State Dependence in Consumers’ Brand Choices Applied to 762 Pharmaceutical Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 69(2), pages 443-483, June.
    2. Hjalmarsson, Linn & Schmid, Christian P.R. & Schreiner, Nicolas, 2024. "A Prescription for Knowledge: Patient Information and Generic Substitution," Working papers 2024/05, Faculty of Business and Economics - University of Basel.
    3. Janssen, Aljoscha & Granlund, David, 2023. "The importance of the first generic substitution: Evidence from Sweden," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 1-25.
    4. Granlund, David, 2019. "A new approach to estimating state dependence in consumers’ brand choices applied to 762 pharmaceutical markets," Umeå Economic Studies 960, Umeå University, Department of Economics.

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    More about this item

    Keywords

    Doctors; Pharmaceuticals; Prescription drugs; Generic drugs; Welfare;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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