Drug price sensitivity among physicians in a developing healthcare system: Evidence from the Philippine market for statins and beta blockers

Abstract

Abstract In healthcare systems with limited drug regulation and weakly enforced generic substitution policies, do physicians prescribe drugs on the basis of prices? This paper tests this result by examining prescription behavior in the Philippines market for lipid-lowering and cardioselective beta blocking agents. Using individual level data on physician prescriptions from the 2013 IMS Health Physician Medical Data Index, we estimate a nested multinomial logit model to examine responses of physicians to price variations across and within an expanded choice set of generic, branded originator, and branded non-originator (‘me-too’) drugs. We demonstrate that price variation across molecules has a substantial effect on the choice of molecule and this effect varies with physician and patient characteristics. This suggests price sensitivity on the part of the physicians who may adjust their prescriptions accordingly.