Tunçel, Tuba (2022) Should We Prevent Off-Label Drug Prescriptions? Empirical Evidence from France. TSE Working Paper, n. 22-1383, Toulouse

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After a drug obtains marketing authorization, the usage depends on the regulation of off-label pre-scriptions for unapproved indications. We investigate the impact of off-label prescription regulation on physicians’ behavior, patients’ health, treatment costs, and pharmaceutical firms’ pricing with a structural demand and supply model. Exploiting rich panel data on physicians’ activities and office visits in France over nine years, we use a model of prescription choice and health outcomes with unobserved patient-level heterogeneity. We identify the demand for on-label and off-label drugs and the effect of prescription choice on health outcomes. On the supply side, we use a Nash-in-Nash bargaining model between the government and the pharmaceutical companies that allows the partial identification of the marginal costs of drugs. Counterfactual simulations show that when we remove off-label drugs from the choice set of physicians, substitution to on-label drugs at constant prices would lead to an increase of 15% in the expenditure on prescription drugs. If we allow bargaining adjustment on drug prices under a ban on off-label prescriptions, the ban would further increase the treatment cost, by 26%, without improving health outcomes.

Item Type: Monograph (Working Paper)
Language: English
Date: September 2022
Place of Publication: Toulouse
JEL Classification: C25 - Discrete Regression and Qualitative Choice Models; Discrete Regressors
D12 - Consumer Economics - Empirical Analysis
I10 - General
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 18 Nov 2022 12:50
Last Modified: 16 Dec 2022 13:06
OAI Identifier: oai:tse-fr.eu:127510
URI: https://publications.ut-capitole.fr/id/eprint/46438
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