big pharma payments to physicians

Two professors from the Rady School of Management, University of California-San Diego, joined by an economist from the University of Washington School of Public Health, have analysed data of  “Dollars for Doctors: How Industry Money Reaches Physicians”, hosted by ProPublica, a consortium of independent journalists .

Their findings are interesting, but not surprising. Medical doctors are human and, like the rest of us, respond to incentives.

The ideal of healthcare provision is embodied in the Hippocratic Oath: “I will prescribe regimens for the good of my patients according to my ability and my judgment…” In this paper, we evaluate whether a physician’s judgment about prescriptions is in part influenced by non-patient sources: those of large, well-financed pharmaceutical companies. ….

Using data from twelve drug companies, more than 330,000 physicians and nearly one billion prescriptions, we find that when a drug company pays a doctor he is more likely to prescribe that company’s drugs. A payment from a pharmaceutical company corresponds to, on average, an additional 29 Medicare prescriptions per year, and this number rises to nearly 100 prescriptions if the payment is at least $1000. Our specifications are stringent, accounting for pharmaceutical firm, state, specialty, and even physician fixed effects. At least some of the evidence reflects rent-seeking behavior on the part of doctors. For example, we find that pay matters for prescribing behavior even among drugs with identical, generic alternatives. Moreover, the pay-for-prescription sensitivity is greater for doctors among high-corruption states and for male doctors. ….

Given that the balance of our evidence is best explained by either persuasive advertising from drug companies or rent-seeking behavior from doctors, to a less-cynical reader our findings should be a call to consider outside influences when taking in medical advice.

Joseph Engelberg, Christopher A. Parsons and Nathan Tefft, “First, Do No Harm: Financial Conflicts in Medicine“, University of California-San Diego, 13 August 2013.


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