Three Essays on Physician Prescribing Behavior
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Brian K. Chen Orals Examination December 4, 2006 Haas School of Business University of California at Berkeley Motivation Prescription drug expenditures: the fastest growing component of health care expenditures 1990s: Prescription drug expenditures grew by 5% to 23% annually in most industrialized countries United States: Fastest growing component of $1.9 trillion health care industry In 2004: Third largest component in the US health care expenditures at 9%, following hospital (31%) and physician (22%) services In 2002: Drug expenditures up by 15.3%, outstripping expenditures in hospital (9.5%) and physician (7.7%) services By 2001: US $607 billion spent on prescription drugs worldwide In nominal terms, top 20 GDP in the world New drugs explain up to 40% of annual drug expenditures growth Dissertation Outline and Research Questions Chapter 1: What are the determinants in the adoption decision of new drugs? Do physician, patient, and hospital characteristics matter in the likelihood/rate of adoption of new drugs? Chapter 2: What is the health outcome impact of new drugs? Do new drugs lead to better health outcomes? Chapter 3: If high costs to patient affect drug use, do physicians take patient costs into consideration? Why are these questions important? Numerous implications Who gets new drugs? Who prescribes new drugs? Theoretical interest – consistent early adopters? Policy interest As first stage analysis for second essay Are new drugs worth their cost? If yes, what are the cost savings? How to encourage appropriate use of new drugs If no, what are the additional costs compared to older, just-as-effective drugs? If financial burden prevents access to new drugs, do physicians take this into consideration? If only marginal improvement, physicians should prescribe older drugs to the financially burdened If substantial improvement, implications for drug copayment policies Contribution Chapter 1: Very little known about physician adoption of new drugs But I need: theoretical framework? Chapter 2: No strong empirical evidence on the effectiveness of new drugs versus older drugs that corrects for selection bias But I need: INSTRUMENT for treatment Background Quick statistics Land Area: 13,823 square miles Population (2006): 23,000,000 2005 GDP: $U.S. 611.5 billion ($U.S. 326.5 billion) 2005 Per Capita GDP: $U.S. 26,700 ($14,200) Health Care in Taiwan: 2003: $U.S. 11 billion National Health Insurance, virtually 100% coverage 5.7 hospital beds per 1,000 people, 1.4 physicians trained in Western medicine for every 1,000 Salient Features of Taiwan’s Health Care System Closed System Freedom of Choice Lack of system of referrals Commingling of diagnostic and dispensing services ◄Chapter 1► Adoption/Diffusion of New Therapeutic Agents Research Question Do patient, physician, and hospital characteristics matter in the likelihood/speed of adoption of new therapeutic agents? Dependent variable: dichotomous variable indicating adoption of a new drug; or time to first adoption Independent variables: Patient : age, gender, ER visits, hospitalizations (condition duration) Characteristics Physician Characteristics: type of doctor, age, gender, experience, tenure, past prescription pattern Hospital Characteristics: Academic, urban, hospital/clinic Drug Characteristics: New mechanism? Long or short-term treatment? Are predictions based on these characteristics consistent across drugs? Literature Review: Adoption of New Drugs “Epidemic” studies Menzel (1955), Coleman (1957), Peay (1988), Denig (1991) Nair (2006) (related) “Firm Heterogeneity” studies Steffesen (1999), Tamblyn (2003), Dybahl (2005) Bayesian model of adoption Motivation to Prescribe Firm heterogeneity model: there exist characteristics that predict adoption of new technology What these characteristics are remains an open empirical question Are these characteristics constant across new drugs? Patient Demand Marketing Activities Physician characteristics: Prime age greater adoption Gender unclear, general view is male greater adoption Past practice volume greater adoption? Type of doctor family practice less adoption *Past use of drugs manufactured by same company greater adoption Patient characteristics Age unclear; depends on drug Gender unclear *Higher Education greater adoption Condition severity unclear Hospital characteristics Academic greater adoption Urban greater adoption Family practice less adoption at hospitals *Drug characteristics Top Prescription Drugs in Taiwan by Sales, 2004 Top ICD-9-CM codes in Taiwan Drugs introduced between 1997-2004 Atorvastatin (Lipitor) (19114/2097) Date of introduction: November 1, 2000 Therapeutic class: statins Indication: to lower cholesterol and thereby reduce cardiovascular disease. With 2005 sales of US$12.2 billion under the brand name Lipitor, it is the largest selling drug in the world Rosiglitazone (Avandia) (15281/1052) Date of introduction: March 1, 2001 Therapeutic Class: thiazolidinedione Indication: Anti-diabetic drug (Diabetes Type II) Clopidogrel (Plavix) (7378/728) Date of introduction: January 1, 2001 Therapeutic Class: Antiplatelet agent Indication: is a potent oral antiplatelet agent often used in the treatment of coronary artery disease, peripheral vascular disease, and cerebrovascular disease. In 2005 it was the world's second highest selling pharmaceutical with sales of US$5.9 billion Other new drugs Celecoxib (Celebrex) Arthritis/Pain (April 1, 2001) (but: side effects) (15574/3952) Esomeprazole (Nexium) Heartburn/Acid Reflux (January 1, 2002) (4250) Olanzapine (Zyprexa) Schizophrenia/Bipolar (February 1, 1999) (5284) Venlafaxine (Effexor) Antidepressant ( October 1, 2000) (2296) Montelukast (Singulair) Asthma (July 1, 2001) (2489) Quetiapine (Seroquel) Schizophrenia/Bipolar (April 1, 2000) (2795) Disease Code Combinations only < 1% of visits have no ICD9 code Description of Data Panel Data Eight years of complete medical claims data for a random selection of 200,000 individuals from Taiwan’s population of 23 million HOSB, PER, DOC and ID files The age, gender, and expenditures of the randomly selected individuals do not differ significantly from the population Time Series (Random Subsamples) Outpatient Expenditures Inpatient Expenditures Prescription Drugs at Contracted Pharmacies (complete) Summary Statistics - Hypertension Empirical Strategy – Likelihood of adoption Probit/Logit Model Pat: Patient Characteristics: age, gender, past number of visits, ER visits, hospitalizations, multiple conditions? Phys: Physician Characteristics: age, gender, experience, tenure, past prescription pattern Hosp: Hospital Characteristics: Academic, urban, family practice Endogenous variable? Omitted variables (Neglected heterogeneity)? New diagnoses? Empirical Strategy – Duration to Adoption Right-Censored Duration Model Continuous or Discrete Time-Scaling Nonparametric or parametric functional form?: Weibull (increasing) Log-logistic Effect of Covariates (same as previous slide) Proportional Hazard (+coeff - hazard / +duration) Accelerated Lifetime Hazard (1 unit +coeff % +duration) Other issues Multiple spells? Time-varying covariates? (move from one hospital to another?) Unobserved Heterogeneity? Diffusion pattern Lipitor (for Hypertensive Patients Only) Preliminary Results – Panel Data Likelihood of Lipitor Adoption Preliminary Results – “Pooled” Data Likelihood of Lipitor Adoption Preliminary Results – Year by Year Likelihood of Lipitor Adoption Discussion Need to reconstruct data from scratch Different types of severity multiplicity of conditions, or severity of a single condition Not surprising: academic, urban providers more likely to adopt, patients with multiple indications more likely to be given Lipitor A little surprising? Female physicians more likely to adopt (probably problem from merged data); female patients more likely to receive Quite surprising? More serious patients less likely to be given Lipitor Future Agenda Better understand What factors lead to CONSISTENT adoption? Disease conditions Patients’ disease progression Drug action mechanism Physician decision-making process Drug sales representatives’ activities Future Research Random Utility Model of Prescribing Behavior? Spillover effects Opinion Leaders Ethnolinguistic differences Celebrex study: when do physicians reject new drugs? ◄Chapter 2► Do new drugs lead to better health outcomes? Research Question Do new drugs lead to better health outcomes? More specifically, do patients who take Lipitor, Avandia, or Plavix experience a reduction in ER visits, hospital admissions, hospital lengths of stay (problem?), and/or medical expenditures (compared to patients taking older drugs)? Quote “Too often,” says Robert Seidman, chief pharmacy officer at health insurer WellPoint, “we're choosing the newer, pricier drug without considering whether older drugs would get the job done just as well” Lipitor: $612/180 20mg tablets Zocor: $799/180 20mg tablets but soon generics Mevacor: $228.31/180 20mg tablets Literature Review Lichtenberg (1996) Number of hospital bed-days declined most rapidly for those diagnoses with the greatest change in the total number of drugs prescribed and greatest change in the distribution of drugs (proxy for novelty) Lichtenberg (2001) Patients who consume newer drugs experience fewer work-loss days than patients who consume older drugs; and the former tend to have lower non-drug expenditures, reducing total expenditures Lichtenberg (2002) With larger dataset, and 3 years instead of 1 year of observation, Lichtenberg argues that a reduction in the age of drugs decreased non-drug expenditures 7.2 times as much as it increased drug expenditures. (8.3 times for Medicare population) Lichtenberg (2005) Effect of the launch of new drugs: Average 1 week increase in life expectancy in the entire population Conceptual Framework Empirical question: Estimation of Average Treatment Effect Are the high cost of new drugs justified based on their health outcome impact? Lichtenberg studies do not address selection bias in treatment Atorvastatin (Lipitor): Clinical Research Collaborative Atorvastatin Diabetes Study (CARDS), 2,800 patients with type-2 diabetes, no history of heart disease, and relatively-low levels of cholesterol, Positive Health outcome: patients who took Lipitor had a 37 percent reduction in major cardiovascular events which included heart attacks, stroke, chest pain that required hospitalization, cardiac resuscitation, and coronary revascularization procedures. 48 percent fewer Lipitor treated patients experienced strokes compared to those who received placebo overall mortality rate for Lipitor patients was 27 percent lower than for those on placebo. But: Study Sponsored by Pfizer / No comparison with older drugs / Relatively Healthy Population Atorvastatin (Lipitor) Clinical Research - Hypertension LIPITOR significantly reduced the rate of coronary events either coronary heart disease (46 events in the placebo group vs 40 events in the LIPITOR group) fatal or MI (108 events in the placebo group vs 60 events in the LIPITOR group)] nonfatal relative risk reduction of 36% (based on incidences of 1.9% for LIPITOR vs 3.0% for placebo), p=0.0005 The risk reduction was consistent regardless of age, smoking status, obesity or presence of renal dysfunction. The effect of LIPITOR was seen regardless of baseline LDL levels. Due to the small number of events, results for women were inconclusive. N = 10,305 (Anglo-Scandinavian Cardiac Outcomes Trial) Source: www.lipitor.com Mixed Results for Lipitor Vs. Zocor By THERESA AGOVINO, AP Business Writer Tuesday, November 15, 2005 06 57 PM High doses of the cholesterol-lowering drug Lipitor were no better at preventing major heart problems than regular doses of rival Zocor, according to the latest study on efforts to aggressively treat the conditions released Tuesday. Lipitor outperformed Zocor on several fronts such as lowering cholesterol and preventing nonfatal heart attacks. The findings will continue to give it an advantage in the market even if generic Zocor is less expensive, some doctors said. But: HIGH DOSE OF LIPITOR vs. REGULAR DOSE OF ZOCOR What about LIPITOR vs. MEVACOR, PRAVACHOL, LESCOL, CRESTOR Empirical Strategy Naïve Fixed Effects Regression Threats to Identification Selection for treatment most likely not random Selection Bias in Treatment Perhaps physicians assign nonrandom populations to treatment Perhaps patients seek physicians who prescribe new drugs (e.g., Lipitor) Correction for Selection Bias Instrumental Variable Approach Gives internally valid causal effects for individuals whose treatment status is manipulable by the instrument Candidates: the combination of covariates from Chapter 2 as an instrument for the treatment (i.e., use of new drug, such as Lipitor) With patient’s pre-adoption status in the instruments to avoid patient self-selection However, may reduce statistical power Note: we can see if patients actually self-select into treatment But: instruments (predicts adoption) may also affect the dependent variable (measures for health outcome)? Correction for Selection Bias Selection on Observables Propensity Score Matching Analysis of the Effects of Unobservables? Cost Analysis Lipitor Costs (Taiwan NHID formulary 2004, in USD): $1.04 per 10 mg tablet; $1.40 per 20 mg; $1.75 per 40 mg What are the cost savings? If new drug reduces emergency and hospital services Savings = reduced cost in emergency and hospital services – increased drug costs What are the additional costs? If new drug has not health outcome impact? Additional cost = difference in price of new and old drugs Distribution of new Lipitor takers “Treatment” vs. “Non-Treatment” Graphical Evidence – ER visits (1009 Lipitor takers) Graphical Evidence – Smoothed ER visits (1009 Lipitor takers) Graphical Evidence – ER visits (656 consistent takers) Graphical Evidence – Smoothed ER visits (656 consistent takers) Graphical Evidence - Hospitalization Graphical Evidence – Hospitalization (1009 Lipitor takers) Graphical Evidence – Smoothed Hospitalization (1009 takers) Graphical Evidence – Hospitalization(656 consistent takers) Graphical Evidence – Smoothed Hospitalization(656 consistent takers) Graphical Evidence – Average Length of Stay Graphical Evidence – Average Length of Stay (1009 Lipitor takers) Graphical Evidence – Smoothed average lengths of stay (1009 Lipitor takers) Graphical Evidence – Average lengths of stay (656 consistent takers) Graphical Evidence – Smoothed average lengths of stay (656 consistent takers) Graphical Evidence – Average Hospital Expenditures Graphical Evidence – Average expenditures (1009 takers) Graphical Evidence – Smoothed average expenditures (1009 takers) Graphical Evidence – Average expenditures (656 consistent takers) Graphical Evidence – Smoothed average expenditures (656 consistent takers) Discussion Consistent Lipitor use does lead to better health outcomes? Not just selection bias if consistency does improve health outcome? But suggestive evidence that healthier patients are more likely to receive Lipitor consistently? But: numerous possibilities for errors while merging 2004 data consistently slightly “bizarre” Treatment indicator very rough. 1 prescription of Lipitor over 2 visits = 50% treatment Need to consider consistency over a prescribed period of time: 3 months? What did they take before Lipitor? Need to include all indications for use of Lipitor Need to adjust for patient heterogeneity SELECTION ISSUES Future Agenda Better understand Drug adoption decisions, based on chapter 1 Quest for proper instrument Hypertension, Hypertensive Heart Diseases, Diabetes, High Cholesterol Clinical trial results for the new drugs Thank you for your attention and valuable assistance ◄Chapter 3► Do physicians consider patient out-of-pocket expenses when prescribing drugs? Research Question Do physicians consider patient out-of-pocket expenses? In August 1999, Taiwan implemented a modest, linear prescription drug copayment system Patients with one of 97 chronic conditions can be exempt from outpatient prescription copayments if physicians give an “chronic illness extended prescription certificate” As of 2005, only 13% of eligible patient-visits receive the extended prescription certificate Do physicians with high practice volume only give the extended prescription certificate? Or do patients have to demand the certificate? Literature Review Three bodies of literature: Impact of cost-sharing on patients’ drug utilization choice: Soumerai et al (1987, 1991, 1994), Nelson (1984), Tamblyn (2001). Patient-Physician Principal-Agent Relationship Especially: Supplier-induced demand (SID): Rice (1983), Yip (1998) Physician consideration of patient out-of-pocket expenses Only survey studies available: Contribution and Limitation Contribution As far as I know, first paper to investigate through non-survey data whether physicians consider patient out-of-pocket expenses in their prescribing behavior Policy implications: Limitation Copayment is insignificant (capped at $3.33 USD until 2001, then capped at $6.66 USD) Generalizability? Correlation Study Conceptual Framework Physicians generally earn greater income through increased practice volume Physicians give certificates if the already have high practice volume Or patients may demand certificate: proxied by competition and patient sophistication Or both Empirical Strategy First: Fixed Effects Regression Investigate effects of copayment on number of drugs, prescription duration, adjusted drug amount, and adjusted drug quantity Empirical Strategy Second: Logit/Probit Estimation Effects of physician practice volume, patient sophistication level, and market competition on the likelihood of giving “extended prescription certificate” Data Files Ambulatory Care Expenditures by Visit Details of Ambulatory Care Orders Inpatient Expenditures by Admission Details of Inpatient Orders Expenditures for Prescriptions Dispensed at Contracted Pharmacies Details of Prescriptions Dispensed at Contracted Pharmacies Ambulatory Care Expenditures by Visit Details of Ambulatory Care Orders Inpatient Files Inpatient Expenditures by Admission Identification information; patient age and gender; date of admission and release; ICD9CM codes, ICD operation codes, DRG code, various fees, various copay amounts Details of Inpatient Orders Identification information; drug dispensed or services rendered Summary Statistics, Master File
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