The incentive to treat: Physician agency and the expansion of the 340B drug pricing program

Abstract

The 340B Drug Pricing Program incentivizes healthcare providers to increase medication use. It does this by allowing certain safety-net hospitals and clinics to purchase outpatient drugs at considerable discounts from manufacturers but be reimbursed at full price by payers. Yet, previous literature has left largely unstudied how the 340B program influences physician prescribing behavior. In this paper, I provide evidence of physician agency among 340B providers in the treatment of breast cancer. I leverage the staggered diffusion of the program to identify the impact of 340B participation on prescribing behavior and patient outcomes. Physicians who join the 340B program increase the share of patients who receive pharmaceutical treatments and increase the intensity of per-patient prescribing. I also find significant increases in prescribing medications that are not included in clinical treatment recommendations and medications to treat side effects. Despite more intensive treatment use, I find no statistically significant change in survival.