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  3. American Economic Review
  4. October 2012
  5. Physician Agency and Adoption of Generic Pharmaceuticals

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Physician Agency and Adoption of Generic Pharmaceuticals

  • Toshiaki Iizuka
American Economic Review
vol. 102, no. 6, October 2012
(pp. 2826–58)
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Abstract

I examine physician agency in health care services in the context of the choice between brand-name and generic pharmaceuticals. I examine micro-panel data from Japan, where physicians can legally make profits by prescribing and dispensing drugs. The results indicate that physicians often fail to internalize patient costs, explaining why cheaper generics are infrequently adopted. Doctors respond to markup differentials between the two versions, indicating another agency problem. However, generics' markup advantages are shortlived, which limits their impact on increasing generic adoption. Additionally, state dependence and heterogeneous doctor preferences affected generics' adoption. Policy makers can target these factors to improve static efficiency. (JEL D82, I11, J44, L65)

Citation

Iizuka, Toshiaki. 2012. "Physician Agency and Adoption of Generic Pharmaceuticals." American Economic Review, 102 (6): 2826–58. DOI: 10.1257/aer.102.6.2826

Additional Materials

JEL Classification

  • D82 Asymmetric and Private Information; Mechanism Design
  • I11 Analysis of Health Care Markets
  • J44 Professional Labor Markets; Occupational Licensing
  • L65 Chemicals; Rubber; Drugs; Biotechnology