Aoife Coady‘s senior thesis, under the supervision of Jere R. Behrman and Juan Pablo Atal, entitled “The Effect of the Physician Payments Sunshine Act on Physician Prescribing Behavior: Evidence from Medicaid,” has been selected to receive a 2020 Rose Undergraduate Senior Thesis Award.
This thesis is on an important topic. Drug expenses are a large component of medical costs in the U.S., and there are many allegations that drugs are overpriced, perhaps in part because of relations between pharmaceutical companies and prescribing doctors. For this reason the Physician Payments Sunshine Act (PPSA) on physician prescribing behavior was passed. The PPSA is a U.S. federal law, implemented in 2013, requiring public reporting of payments to physicians by pharmaceutical companies. An important, but understudied question, is what impact has the PPSA had on drug prescriptions and expenditures. Aoife investigates this question. She uses a difference-in-differences approach to compare physician prescription patterns in six “control” states, which implemented state-level payment disclosure policies prior to the PPSA, with the remaining “treatment” states, which did not implement state-level disclosure policies, before and after 2013 (and 2010, to test for an announcement effect). This approach enables her to control for unobserved fixed state-level factors that affect the level of prescriptions in each state and for unobserved nation-wide changes between the pre-PPSA enactment period and after its enactment that affect the changes in prescriptions across states. Her study examines the number of brand-name prescriptions made and associated prescription expenditures under Medicaid coverage for four classes of drugs (Statins, SSRIs, Antipsychotics, and Opioids). The findings indicate the law had varying impacts on different drug classes, causing decreases in Statin prescriptions and expenditures, an increase in Opioid prescriptions, and not impacting SSRI or Antipsychotic prescriptions or expenditures.