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Hospitals and the generic versus brand-name prescription decision in the outpatient sector

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  • Gerald J. Pruckner
  • Thomas Schober

Abstract

Healthcare payers try to reduce costs by promoting the use of cheaper generic drugs. We show strong interrelations in drug prescriptions between the inpatient and outpatient sectors by using a large administrative dataset from Austria. Patients with prior hospital visits have a significantly lower probability of receiving a generic drug in the outpatient sector. The size of the effect depends on both the patient and doctor characteristics, which could be related to the differences in hospital treatment and heterogeneity in the physicians’ adherence to hospital choices. Our results suggest that hospital decisions create spillover costs in healthcare systems with separate funding for inpatient and outpatient care.

Suggested Citation

  • Gerald J. Pruckner & Thomas Schober, 2016. "Hospitals and the generic versus brand-name prescription decision in the outpatient sector," Economics working papers 2016-11, Department of Economics, Johannes Kepler University Linz, Austria.
    • Handle: RePEc:jku:econwp:2016_11
    Note: English
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    References listed on IDEAS

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    1. Brekke, Kurt Richard & Holmås, Tor Helge & Straume, Odd Rune, 2013. "Margins and market shares: Pharmacy incentives for generic substitution," European Economic Review, Elsevier, vol. 61(C), pages 116-131.
    2. Judith K. Hellerstein, 1998. "The Importance of the Physician in the Generic Versus Trade-Name Prescription Decision," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 108-136, Spring.
    3. Rauf Gönenç & Maria M. Hofmarcher & Andreas Wörgötter, 2011. "Reforming Austria's Highly Regarded but Costly Health System," OECD Economics Department Working Papers 895, OECD Publishing.
    4. Dylst, Pieter & Vulto, Arnold & Simoens, Steven, 2011. "Tendering for outpatient prescription pharmaceuticals: What can be learned from current practices in Europe?," Health Policy, Elsevier, vol. 101(2), pages 146-152, July.
    5. repec:bla:jindec:v:48:y:2000:i:3:p:349-69 is not listed on IDEAS
    6. Liu, Ya-Ming & Yang, Yea-Huei Kao & Hsieh, Chee-Ruey, 2009. "Financial incentives and physicians' prescription decisions on the choice between brand-name and generic drugs: Evidence from Taiwan," Journal of Health Economics, Elsevier, vol. 28(2), pages 341-349, March.
    7. Toshiaki Iizuka, 2012. "Physician Agency and Adoption of Generic Pharmaceuticals," American Economic Review, American Economic Association, vol. 102(6), pages 2826-2858, October.
    8. Lundin, Douglas, 2000. "Moral hazard in physician prescription behavior," Journal of Health Economics, Elsevier, vol. 19(5), pages 639-662, September.
    9. Georg Heinze & Milan Hronsky & Berthold Reichardt & Christoph Baumgärtel & Marcus Müllner & Anna Bucsics & Wolfgang Winkelmayer, 2015. "Potential Savings in Prescription Drug Costs for Hypertension, Hyperlipidemia, and Diabetes Mellitus by Equivalent Drug Substitution in Austria: A Nationwide Cohort Study," Applied Health Economics and Health Policy, Springer, vol. 13(2), pages 193-205, April.
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    Cited by:

    1. Alexander Ahammer & Ivan Zilic, 2017. "Do Financial Incentives Alter Physician Prescription Behavior? Evidence from Random Patient-GP Allocations," Working Papers 1701, The Institute of Economics, Zagreb.

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    More about this item

    Keywords

    Prescription decision; generic drugs; physician behavior; hospitals.;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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