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)