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Medical providers as double agents in a universal health care system: evidence from generic pharmaceutical adoption in Taiwan

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  • Meng-Chi Tang

    (National Chung Cheng University)

  • Yi-Nong Wu

    (Chunghwa Post Co., Ltd.)

Abstract

This paper investigates medical providers’ generic pharmaceutical adoption in Taiwan, stresses that this decision involves the interests of providers, patients and insurance payer. We examine this prescription behavior using Taiwanese data because patients and physicians did not self-select their insurance plans under a universal health care system. Physicians in Taiwan also respond to strong financial incentives because they are allowed to both prescribe and dispense drugs. The empirical results show that a larger price difference between brand-name and generic drugs increases physicians’ likelihood for prescribing generic prescriptions. However, this effect decreases as the payer’s cost share percentage increases. This study also demonstrates that some physicians prescribed more generic drugs than the others, including the hospital and clinic owners, and the ones practicing in clinics and private institutions.

Suggested Citation

  • Meng-Chi Tang & Yi-Nong Wu, 2020. "Medical providers as double agents in a universal health care system: evidence from generic pharmaceutical adoption in Taiwan," Empirical Economics, Springer, vol. 59(1), pages 169-203, July.
    • Handle: RePEc:spr:empeco:v:59:y:2020:i:1:d:10.1007_s00181-019-01674-9
    DOI: 10.1007/s00181-019-01674-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Diabetes; Generic drugs; Agency problem; Universal health care system;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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