Disentangling true determinants of drug therapy effectiveness: A double fixed effects approach

Understanding the role of drug adherence in everyday clinical practice is central for the policy maker agenda. Despite researchers have investigated this issue at length, uncertainty remains about the true contribution of drug adherence in enhancing therapy effectiveness. In this paper, we aim at partly lower this uncertainty by exploiting a unique panel dataset at patient and physician level. In particular, we investigate to which extent the adherence marginal effect is affected by physicians and patients observed and unobserved heterogeneity. Our results show that the role of drug adherence on health outcomes is significantly crowded out when the model control for both physician- and patient-specific factors. This evidence has important implications for the design of incentive schemes targeted at improving chronic disease management.