Generic Pharmaceutical Adoption with Mismeasured Physician Agency

Published in under submission, 2019

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Physicians’ markup from prescription drugs may affect their’ generic pharmaceutical adoption, but this information is rarely available. We retrieved the average markup of each drug in Taiwan, which records detailed pricing and prescription data under universal healthcare system. While we did not observe the markup by provider, we proposed an empirical model that allows the markup to be measured with error. We found that physicians’ generic pharmaceutical adoption increases with markup differentials between generic and branded drugs, especially the employed physicians in hospitals and the physicians worked in private facilities. We also inferred the true distribution of providers’ markup differentials based on the mismeasured ones. We found that private hospitals are likely to receive the largest markup in Taiwan, followed by public hospitals and the owners of private clinics.