2022/03/03 by Melissa Newham, Newham, Melissa, Marica Valente +1
Economics, Econometrics and Finance · Pharmacology, Toxicology and Pharmaceutics · #FOS: Economics and business #General Economics (econ.GN) #Healthcare Policy and Management #Pharmaceutical Economics and Policy #Pharmaceutical industry and healthcare
paper · pdf · doi:10.48550/arxiv.2203.01778
openalex publication_date 2022/03/03 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
This paper studies how gifts - monetary or in-kind payments - from drug firms to physicians in the US affect prescriptions and drug costs. We estimate heterogeneous treatment effects by combining physician-level data on antidiabetic prescriptions and payments with causal inference and machine learning methods. We find that payments cause physicians to prescribe more brand drugs, resulting in a cost increase of 30 per dollar received. Responses differ widely across physicians, and are primarily explained by variation in patients' out-of-pocket costs. A gift ban is estimated to decrease drug costs by 3-4%. Taken together, these novel findings reveal how payments shape prescription choices and drive up costs.