Does Physician Dispensing Increase Drug Expenditures?

Kaiser, Boris; Schmid, Christian (July 2013). Does Physician Dispensing Increase Drug Expenditures? (Discussion Papers 13-03). Bern: Department of Economics

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We analyze whether the possibility for physicians to dispense drugs increases health care
expenditures due to the incentives created by the markup on drugs sold. Using comprehensive physician-level data from Switzerland, we exploit the fact that there is regional variation in the dispensing regime to estimate policy effects. The empirical strategy consists of doubly-robust estimation which combines inverse-probability weighting with regression. Our main finding suggests that if dispensing is permitted, physicians produce significantly higher drug costs in the order of 30% per patient.

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