Financial incentives and prescribing behavior in primary care

Area of Science:

• Health economics
• Pharmaceutical policy
• Primary care research

Background:

• Healthcare systems often restrict physicians from dispensing prescribed medications.
• Concerns include potential for increased, ineffective, or overly expensive prescribing.
• Understanding the economic impact of physician dispensing is crucial for policy.

Purpose of the Study:

• To estimate the effect of physician dispensing rights on prescribing behavior.
• To analyze impacts on both the extensive (dispensing vs. non-dispensing practices) and intensive (proportion of patients dispensed to) margins.
• To quantify the financial consequences of physician dispensing on drug costs.

Main Methods:

• Utilized data from the English National Health Service (NHS) spanning 2011-2018.
• Employed econometric techniques including Ordinary Least Squares (OLS), entropy balancing, and two-stage least squares (2SLS).
• Controlled for observable and unobservable practice characteristics influencing selection into dispensing.

Main Results:

• Physician dispensing was associated with a 3.1% increase in drug costs per patient.
• This increase was driven by prescribing a higher volume and more expensive medications.
• Dispensing practices tended to prescribe smaller drug packages, influenced by reimbursement structures.

Conclusions:

• Physician dispensing rights can lead to higher overall drug expenditures.
• Reimbursement models may influence prescribing patterns, such as package size.
• As dispensing prevalence increases within a practice, prescribing behavior shifts towards that of non-dispensing practices.