Are Physicians' Prescribing Decisions Sensitive to Drug Prices?

Evidence from a Free-Antibiotics Program

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One retailer offered a 14-day supply of generic oral antibiotics free of charge to customers with prescriptions.

The Issue:
Many studies examine various patient-side and physician-side factors influencing physicians’ prescribing behavior. This study, utilizing a natural experiment, examines the role of cost considerations at the patient-level in physicians’ prescribing decision, and quantifies the effect of the free-antibiotics program on antibiotics prescriptions.

Key Findings

  • Filled antibiotic prescriptions in the program area increased by 4.8 percent from baseline.

  • Filled prescriptions of covered antibiotics increased despite being partially offset by a decrease in not-covered antibiotics.

  • The number of filled prescriptions of not-covered antibiotics that did not have covered (generic) equivalents decreased.

  • Low-income areas observed a larger increase in covered antibiotics and a larger decrease in not-covered antibiotics.

Conclusion: This study suggests that physicians do consider cost when presented with price information gathered from patients. Further research is needed to better understand additional factors influencing a physicians’ prescribing decisions.

About the Study: Midwestern retail chain Meijer offered a 14-day supply of certain generic oral antibiotics free of charge to customers with prescriptions. Employing difference-in-differences (DD), the researchers used the incidence of sales though Meijer and other retail outlets at the zip code level for each month from 2004 to 2007 in four states.