The European Journal of Health Economics

, Volume 19, Issue 2, pp 213–222 | Cite as

The impact of physician-level drug budgets on prescribing behavior

  • Katharina Elisabeth FischerEmail author
  • Taika Koch
  • Karel Kostev
  • Tom Stargardt
Original Paper


To contain pharmaceutical spending, drug budgets have been introduced across health systems. Apart from analyzing whether drug budgets fulfill their overall goal of reducing spending, changes in the cost and quality of prescribing and the enforcement mechanisms put in place need evaluation to assess the effectiveness of drug budgets at the physician level. In this study, we aim to analyze the cost and quality of prescribing conditional on the level of utilization of the drug budget and in view of varying levels of enforcement in cases of overspending. We observed drug budget utilization in a panel of 440 physicians in three federal states of Germany from 2005 to 2011. At the physician level, we retrospectively calculated drug budgets, the level of drug budget utilization, and differentiated by varying levels of enforcement where physicians overspent their budgets (i.e., more than 115/125% of the drug budget). Using lagged dependent-variable regression models, we analyzed whether the level of drug budget utilization in the previous year affected current prescribing in terms of various indicators to describe the cost and quality of prescribing. We controlled for patient and physician characteristics. The mean drug budget utilization is 92.3%. The level of drug budget utilization influences selected dimensions of cost and quality of prescribing (i.e., generic share (estimate 0.000215; p = 0.0246), concentration of generic brands (estimate 0.000585; p = 0.0056) and therapeutic substances (estimate −0.000060; p < 0.0001) and the share of potentially inappropriate medicines in the elderly (estimate 0.001; p < 0.0001)), whereas the level of enforcement does not. Physicians seem to gradually adjust their prescription patterns, especially in terms of generic substitution.


Market regulation Cost of prescribing Physicians Pharmaceuticals 

JEL Classification

I11 (Analysis of Health Care Markets) 



Funding: This study was supported by a research grant from the Federal Ministry of Education and Research in Germany (grant number BMBF 01EH1101A).

Compliance with ethical standards

Conflict of interest

There is no conflict of interest.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2017

Authors and Affiliations

  • Katharina Elisabeth Fischer
    • 1
    • 2
    Email author
  • Taika Koch
    • 2
  • Karel Kostev
    • 3
  • Tom Stargardt
    • 2
  1. 1.CINCH Health Economics Research CenterUniversity of Duisburg-EssenEssenGermany
  2. 2.Hamburg Center for Health EconomicsUniversity of HamburgHamburgGermany
  3. 3.IMS Health, EpidemiologyFrankfurt Am MainGermany

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