Prescription of generics and physician moral hazard: evidence from France

Abstract

This work investigates how physician, patient and drug characteristics interact in the prescription decision between brand-name and generic drugs. It aims at verifying whether non-medical factors affect the outcome of the prescription process and whether physicians adjust the choice of the brand version to patient preferences and characteristics, a form of moral hazard à la Pauly (1968). The analysis uses CEGEDIM data on a representative sample of 327 French General Practitioners and 10627 patients, receiving prescriptions between 2000 and 2008 for drugs in five therapeutic classes (anti-ulcer, anti-diabetes, anti-hypertensive, anti-cholesterol and antidepressant drugs). Results suggest that physician and patient characteristics play a major role in explaining the decision on the brand type: patients that are fully reimbursed show a higher probability of receiving a brand-name prescription. Regulation matters as well: the introduction of reference pricing on some drugs is estimated to increase signifcantly the probability of generic prescription.