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Financial incentives and prescribing behavior in primary care

Author

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  • 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.

Suggested Citation

  • Olivia Bodnar & Hugh Gravelle & Nils Gutacker & Annika Herr, 2024. "Financial incentives and prescribing behavior in primary care," Health Economics, John Wiley & Sons, Ltd., vol. 33(4), pages 696-713, April.
    • Handle: RePEc:wly:hlthec:v:33:y:2024:i:4:p:696-713
    DOI: 10.1002/hec.4793
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    1. Stacherl, Barbara & Renner, Anna-Theresa & Weber, Daniela, 2023. "Financial incentives and antibiotic prescribing patterns: Evidence from dispensing physicians in a public healthcare system," Social Science & Medicine, Elsevier, vol. 321(C).

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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