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The Effects of Competition on Physician Prescribing (WP-23-03)

Janet Currie, Anran Li, and Molly Schnell

The researchers ask how competition influences the prescribing practices of physicians. Law changes granting nurse practitioners (NPs) the ability to prescribe controlled substances without physician collaboration or oversight generate exogenous variation in competition. In response, they find that general practice physicians (GPs) significantly increase their prescribing of controlled substances such as opioids and controlled anti-anxiety medications. GPs also increase their co-prescribing of opioids and benzodiazepines, a practice that goes against prescribing guidelines. These effects are more pronounced in areas with more NPs per GP at baseline and are concentrated in physician specialties that compete most directly with NPs. The researchers’ findings are consistent with a simple model of physician behavior in which competition for patients leads physicians to move toward the preferences of marginal patients. These results demonstrate that more competition will not always lead to improvements in patient care and can instead lead to excessive service provision.

Janet Currie, Henry Putnam Professor of Economics and Public Affairs, Princeton University

Anran Li, Department of Economics, Northwestern University

Molly Schnell, Assistant Professor of Economics and IPR Fellow, Northwestern University

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