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Fixed budgets as a cost containment measure for pharmaceuticals

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  • David Granlund
  • Niklas Rudholm
  • Magnus Wikström

Abstract

In the county of Västerbotten, Sweden, there are two health centres which (contrary to all other health centres in the region) have a strict responsibility over their pharmaceutical budget. The purpose of this paper is to examine if the prices and quantities of pharmaceuticals prescribed by physicians working at these health centres differ significantly from those prescribed by physicians at health centres with open-ended budgets. Estimation results using matching methods, which allows us to compare similar patients at the different health centres, show that the introduction of fixed pharmaceutical budgets did not affect physicians' prescription behaviour.
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Suggested Citation

  • David Granlund & Niklas Rudholm & Magnus Wikström, 2006. "Fixed budgets as a cost containment measure for pharmaceuticals," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 7(1), pages 37-45, March.
    • Handle: RePEc:spr:eujhec:v:7:y:2006:i:1:p:37-45
    DOI: 10.1007/s10198-005-0328-8
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    References listed on IDEAS

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    1. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    2. J. Kornai & E. Maskin & G. Roland, 2004. "Understanding the Soft Budget Constraint," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 11.
    3. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    4. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002 9, Royal Economic Society.
    5. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    6. Lundin, Douglas, 2000. "Moral hazard in physician prescription behavior," Journal of Health Economics, Elsevier, vol. 19(5), pages 639-662, September.
    7. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(2), pages 261-294.
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    Citations

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    Cited by:

    1. Riise, Julie & Hole, Arne Risa & Gyrd-Hansen, Dorte & Skåtun, Diane, 2016. "GPs' implicit prioritization through clinical choices – evidence from three national health services," Journal of Health Economics, Elsevier, vol. 49(C), pages 169-183.
    2. Granlund, David, 2008. "Does physicians' compensation affect the probability of their vetoing generic substitution?," Umeå Economic Studies 729, Umeå University, Department of Economics, revised 26 Mar 2008.
    3. Granlund, David, 2009. "Are private physicians more likely to veto generic substitution of prescribed pharmaceuticals?," Social Science & Medicine, Elsevier, vol. 69(11), pages 1643-1650, December.
    4. Lina Maria Ellegård, 2020. "Effects of pay-for-performance on prescription of hypertension drugs among public and private primary care providers in Sweden," International Journal of Health Economics and Management, Springer, vol. 20(3), pages 215-228, September.
    5. Kim Olsen & Dorte Gyrd-Hansen & Andreas Boegh & Sofie Hansen, 2009. "GPs as citizens’ agents: prescription behavior and altruism," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 10(4), pages 399-407, October.
    6. Andersson, Karolina & Bergstrom, Gina & Petzold, Max G. & Carlsten, Anders, 2007. "Impact of a generic substitution reform on patients' and society's expenditure for pharmaceuticals," Health Policy, Elsevier, vol. 81(2-3), pages 376-384, May.
    7. Granlund, David, 2008. "Does Physicians' Compensation Affect the Probability of their Vetoing Generic Substitution?," HUI Working Papers 14, HUI Research.
    8. Katharina Elisabeth Fischer & Taika Koch & Karel Kostev & Tom Stargardt, 2018. "The impact of physician-level drug budgets on prescribing behavior," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(2), pages 213-222, March.

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    More about this item

    Keywords

    Fixed budgets; Pharmaceuticals; Cost containment; Propensity score matching;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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