Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
961995 | Journal of Health Economics | 2009 | 9 Pages |
Abstract
This paper tests the hypothesis of whether or not financial incentives affect a physician's prescription decision on the choice of generic versus brand-name drugs within a system in which physicians prescribe and dispense drugs. By using data obtained from Taiwan and focusing on diabetic patients, our empirical results provide several consistent findings in support of the hypothesis that profit incentives do affect the physician's prescribing decision, suggesting that physicians act as imperfect agents. An important implication of our findings is that rent seeking for profit margin between the reimbursement and the acquisition price instead of reducing costs is the major driving force behind generic substitution. As a result, the providers instead of the payers or consumers reap the financial benefits of generic substitution.
Related Topics
Health Sciences
Medicine and Dentistry
Public Health and Health Policy
Authors
Ya-Ming Liu, Yea-Huei Kao Yang, Chee-Ruey Hsieh,