Physician agency issues and response to FDA labeling: The case of anti-cancer drugs
Understanding the influence of financial incentives on physician behavior has been a priority for US policy makers. Physician-administered drugs have explicit financial incentives for physicians, with profit margins ranging from pennies to hundreds of dollars across different drugs. This research examines physicians' response to these incentives as well as other factors like FDA-approved label, clinical information, and other factors when choosing treatments for metastatic breast cancer. I create a panel of 4,503 patients with SEER-Medicare and other data who were diagnosed with metastatic breast cancer and treated with anti-cancer drugs from 1992 to 2002. Discrete choice models are employed to analyze the effects of product attributes, including financial margin, FDA-labeled indications, volume of randomized controlled trial publications, and other covariates, on odds of choice of anti-cancer drug. I use drug-level fixed effects, a patient disease severity index, instruments, and a control function to identify coefficients of interest. Conditional and mixed logit forms are estimated through maximum and simulated maximum likelihood estimation, respectively. The odds ratio for financial incentives for a patient's first anti-cancer drug administration is positive and significant on choice of drug (OR = 1.0005 to 1.0030; p<0.001). A $100 increase in reimbursement per day increases the odds of choosing a drug by 5 to 30 percent. Odds of choosing a drug are 26 to 79 percent lower if the drug is off-label for breast cancer treatment versus one that is on-label; statistical significance disappears in three of four specifications in the mixed logit. This research provides evidence that financial incentives had a positive but modest effect on the average physician's choice of anti-cancer drug when treating metastatic breast cancer. Coefficient estimates are all positive, significant and robust to multiple specification and model changes, but a simulation model predicts a total budgetary impact for Medicare of less than one million dollars a year for metastatic breast cancer by 2000. Physicians seem to prefer on- to off-label drugs, especially for first administrations. Regulators at CMS and FDA should consider this research method when reviewing reimbursement and labeling policy in the future.
|Year of publication:||
|Authors:||Johnson, Scott Joseph|
|Type of publication:||Other|
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