Are Physicians' Prescribing Decisions Sensitive to Drug Prices? Evidence from a Free‐antibiotics Program

This paper investigates whether patient‐level factors, in particular cost considerations, affect the physicians' prescribing decisions. In the context of a natural experiment, we examine the effect of the first US commercial free‐antibiotics program on retail antibiotic sales. We find an overall increase in antibiotic prescriptions under the program and substitutions to covered antibiotics from not‐covered antibiotics. The shift away from not‐covered antibiotics, particularly from those without covered equivalents, indicates a change in the physicians' prescribing decisions. We locate stronger program effects in low‐income areas. Our findings, robust to a variety of specifications, are in contrast with previous literature. Copyright © 2013 John Wiley & Sons, Ltd.