The Effects of Price Information on Physician Prescribing Patterns — A Literature Review

Abstract

Rising expenditures for drugs under Medicare, Medicaid, and other federally funded programs have prompted the Department of Health, Education and Welfare to adopt regulations aimed at achieving cost containment. The Maximum Allowable Cost (MAC) regulations exemplify this effort. One of the components of these regulations proposes to generate added cost savings by influencing physicians to prescribe lower cost drugs to a greater extent. This would result from the provision of drug cost information to the physicians. The literature was reviewed in an attempt to predict the impact that drug cost information might have on the physician's prescribing decision and reimbursement costs. The conclusion reached is that physicians will not incorporate price information into the prescribing decision to the extent necessary for the achievement of cost savings. An alternative strategy is proposed which utilizes pharmacists to provide prescribers with drug information. This strategy is based on the efficacy of the drug industry's detailmen in providing drug information, the availability of trained manpower, and empirical evidence supporting this activity's cost containment potential. Finally, the need for evaluative research in five areas is suggested prior to the implementation of programs similar to that proposed by HEW.