Financial incentives and physician prescription behavior: Evidence from dispensing regulations

Burkhard, Daniel; Schmid, Christian; Wüthrich, Kaspar (November 2015). Financial incentives and physician prescription behavior: Evidence from dispensing regulations (Discussion Papers 15-11). Bern: Department of Economics

dp1511.pdf - Published Version
Available under License Creative Commons: Attribution (CC-BY).

Download (573kB) | Preview

In many healthcare markets, physicians can respond to changes in reimbursement schemes by changing the volume (volume response) and the composition of services provided (substitution response). In this paper, we examine the relative importance of the volume and substitution response in the context of physician drug dispensing. We use data on the market for ambulatory care in Switzerland in which different dispensing regimes (banned/allowed) co-exist at the regional level. Using doubly-robust regression and semiparametric quantile treatment effect estimators, we find that dispensing increases drug costs by 52% for general practitioners and 56% for medical specialists. This increase is mainly due to a volume increase of about 56% for general practitioners and 74% for specialists. The substitution response is negative on average (around −4% for general practitioners and −20% for specialists), but not significantly different from zero for large parts of the distribution. In other words, drug dispensing causes physicians to sell more drugs but not to substitute towards more expensive drugs. In addition, our results reveal substantial effect heterogeneity along the distribution.

Item Type:

Working Paper


03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Burkhard, Daniel; Schmid, Christian Philipp and Wüthrich, Kaspar


300 Social sciences, sociology & anthropology > 330 Economics


Discussion Papers


Department of Economics




Lars Tschannen

Date Deposited:

28 Dec 2020 11:13

Last Modified:

12 Mar 2021 03:54

JEL Classification:

I11, I18




Actions (login required)

Edit item Edit item
Provide Feedback