Müller, Tobias; Schmid, Christian; Gerfin, Michael (2022). Rents for Pills: Financial Incentives and Physician Behavior. Journal of health economics, 87, p. 102711. Elsevier 10.1016/j.jhealeco.2022.102711
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We study the impact of financial incentives on the prescription behavior of physicians. A recent reform in Switzerland enables physicians to dispense drugs to patients and earn a markup on each prescription. We find that the reform leads to a significant increase in drug costs per patient by about +$20 translating to higher physician earnings (+$30). We show that the revenue increase can be decomposed into a substitution and rent seeking component. Physicians engage in rent seeking by a) substituting larger with smaller packages and b) cherry-picking more profitable brands. Although patient health is not sacrificed, the rent seeking behavior results in unnecessary costs for society.
Item Type: |
Journal Article (Original Article) |
|---|---|
Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics |
UniBE Contributor: |
Müller, Tobias Benjamin, Gerfin, Michael |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
ISSN: |
0167-6296 |
Publisher: |
Elsevier |
Language: |
English |
Submitter: |
Dino Collalti |
Date Deposited: |
31 Jan 2022 08:56 |
Last Modified: |
25 Dec 2022 01:56 |
Publisher DOI: |
10.1016/j.jhealeco.2022.102711 |
BORIS DOI: |
10.48350/163819 |
URI: |
https://boris.unibe.ch/id/eprint/163819 |
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