The Swedish Retail Institute (HUI) and Umeå University, Department of Economics, Stockholm/Umeå, Sweden. david.granlund@econ.umu.se
Abstract
Physicians' decisions whether or not to veto generic substitution were analyzed using a sample of 350,000 pharmaceutical prescriptions from the county of Västerbotten, Sweden. Although generic substitution reforms have been introduced in many European countries and American states, this is to my knowledge the first study on this topic. The topic is important since physicians' decisions regarding generic substitution not only directly affect patients' and insurers' costs for pharmaceuticals, but also indirectly since more bans against substitution reduces price-competition between pharmaceutical firms. The primary purpose was to test if physicians working at private practices were more likely to oppose substitution than county-employed physicians working on salary. It was found that private physicians were 50-80% more likely to veto substitution. Also, the probability of a veto was found to increase as patients' copayments decreased. This might indicate moral hazard in insurance, though other explanations are plausible.