By the same authors

Financial incentives and prescribing behaviour in primary care

Research output: Working paper



Publication details

DatePublished - Apr 2021
PublisherCentre for Health Economics, University of York
Place of PublicationYork, UK
Number of pages33
Original languageEnglish

Publication series

NameCHE Research Paper
PublisherCenrte for Health Economics, University of York


Many healthcare systems prohibit primary care physicians from dispensing the drugs they prescribe due
to concerns that this encourages excessive, ineffective or unnecessarily costly prescribing. Using data
from the English National Health Service for 2011 to 2018, we estimate the impact of physician dispensing
rights on prescribing behaviour at the extensive margin (comparing practices that dispense and those that
do not) and the intensive margin (comparing practices with different proportions of patients to whom they dispense). Our empirical strategy controls for practices selecting into dispensing based on observable (OLS, entropy balancing) and unobservable practice characteristics (2SLS). We show that physician dispensing raises drug costs per patient by 4.2%, which reflects more and more expensive drugs being prescribed, including potentially inappropriate substances such as opioids. Dispensing practices also prescribe smaller packages as reimbursement is partly based on a fixed fee per prescription dispensed. Similar effects are observed at the intensive margin.

    Research areas

  • Physician dispensing, primary care, drug expenditure, physician agency

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