A recent study by Finnish Centre of Excellence in Tax Systems Research investigates the drug prescriptions made by physicians in the private and public sector to treat high cholesterol and type two diabetes. The results are clear: physicians working in the private sector are significantly more likely to prescribe their patients expensive medication, even though there are more affordable approved alternatives available.
Type two diabetes and high cholesterol are significant illnesses both in terms of public health and the costs of treatment and medication. A recent study by Finnish Centre of Excellence in Tax Systems Research examines the drug prescriptions for the treatment of diabetes and high cholesterol by physicians in the private and public sector. The results are clear: doctors working in the private sector are significantly more likely to prescribe their patients expensive medication, even though there are more affordable approved alternatives available. The cost difference is largely borne by society due to generous public insurance for medication.
Elina Jussila and Kaisa Kotakorpi from Tampere University and Jouko Verho from VATT Institute for Economic Research examined drug prescriptions made by physicians in private and public healthcare for the treatment of high cholesterol and type two diabetes in Finland in 2017. The sample included around 15 000 doctors, 475 000 patient visits related to diabetes, and 705 000 related to high cholesterol. The study analysed the prescriptions for drugs to treat these illnesses, for which there are treatment options available at multiple price levels.
The study found that doctors in the private sector are more likely to prescribe the more expensive medication alternatives when treating either of the illnesses. The difference in the prescription behaviour persisted, even when underlying factors related patients’ demographics, socio-economic background and health status were controlled using detailed administrative data. In a subgroup analysis, it was possible to examine the same patients seeking treatment from different sectors during the same year, and the treatment difference persisted also in this case.
The results indicate that similar – or even the same – patients are being treated differently depending on whether they get their treatment from the public or private sector.
– The results raise the question of whether some patients’ treatments are selected based on other factors than purely medical considerations, says Professor Kaisa Kotakorpi.
Based on the results, it cannot be said unequivocally whether the treatment differences are due to over-treatment in the private sector or under-treatment in the public sector, or some third factor. Further research is needed to clarify the sources of the difference.
– The results are nevertheless significant both in terms of patient treatment and the healthcare sector, struggling with pressure to reduce costs, because a significant part of the costs of medication is covered by national health insurance, which is publicly funded.
In Finland, pharmacies have the responsibility to offer generic substitution to patients. Generic substitution means the replacement by pharmacy personnel of the medicinal product prescribed by a doctor or a dentist with the cheapest or nearly cheapest generic medicine suitable for substitution. The doctor prescribing the drug can forbid the substitution if there is a valid medical reason for that.
Our study, however, examined medications with different pharmacologically active substances in the expensive and affordable options. Therefore, these medications were not interchangeable with each other by the pharmacies, even though they are being used to treat the same illness.
FIT Working Paper No. 5 Prescription behavior of physicians in the public and private sector can be found on Finnish Centre of Excellence in Tax Systems Research’s website under Publications.
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