Financial incentives and prescribing behavior in primary care

authored by

Olivia Bodnar, Hugh Gravelle, Nils Gutacker, Annika Herr

Abstract

Many healthcare systems prohibit primary care physicians from dispensing the drugs they prescribe due to concerns that this encourages excessive, ineffective or unnecessarily costly prescribing. Using data from the English National Health Service for 2011–2018, we estimate the impact of physician dispensing rights on prescribing behavior at the extensive margin (comparing practices that dispense and those that do not) and the intensive margin (comparing practices with different proportions of patients to whom they dispense). We control for practices selecting into dispensing based on observable (OLS, entropy balancing) and unobservable practice characteristics (2SLS). We find that physician dispensing increases drug costs per patient by 3.1%, due to more, and more expensive, drugs being prescribed. Reimbursement is partly based on a fixed fee per package dispensed and we find that dispensing practices prescribe smaller packages. As the proportion of the practice population for whom they can dispense increases, dispensing practices behave more like non-dispensing practices.

Organisation(s)

Institute of Health Economics

External Organisation(s)

Univ. York, Dep. Comput. Sci., Non-Stand. Comput. Group
Heinrich-Heine-Universität Düsseldorf

Type

Article

Journal

Health Economics (United Kingdom)

Volume

33

Pages

696-713

No. of pages

18

ISSN

1057-9230

Publication date

02.03.2024

Publication status

Published

Peer reviewed

Yes

ASJC Scopus subject areas

Health Policy

Sustainable Development Goals

SDG 3 - Good Health and Well-being

Electronic version(s)

https://doi.org/10.1002/hec.4793 (Access: Open)