Impact of the Affordable Care Act’s Physician Payments Sunshine Act on Physician Prescribing

Abstract

Financial relationships between physicians and the pharmaceutical industry in the U.S are an impediment to the affordability and cost transparency of prescription medications. As part of the Affordable Care Act, the Physician Payments Sunshine Act (PPSA) requires medical product manufacturers including pharmaceutical companies to disclose to the Centers for Medicare and Medicaid Services (CMS) any payments made to physicians, starting in 2013. We evaluate the impact of the PPSA on physician prescribing of brand versus generic drugs in two drug classes: statin and antidepressants. We adopt a difference-in-differences and event study design, leveraging as the control group physicians in two states, MA and VT, which implemented similar state laws prior to the national PPSA. To address selection bias, our analytical sample includes physicians practicing in border counties between the treatment (NH, NY, RI) and control (MA, VT) states. Using 2011-2015 commercial insurance claims data from Health Care Cost Institute, we find that the PPSA led to a 26% reduction in new prescriptions of brand-name statin, and a 12% reduction in new prescriptions of brand-name antidepressants over the study period. We also find small to insignificant decrease in generic prescribing in both drug classes. The reduction in branded prescriptions occurred among physicians with all levels of industry payments in the post-PPSA period, and more pronounced among physicians with the highest level of drug spending pre-PPSA. The changes were primarily driven by physicians decreasing number of patients receiving drugs on an annual basis. We do not find evidence that the PPSA changed the clinical case-mix of patients receiving drugs. We estimate that the PPSA led to annual savings of approximately $0.8 million for statin and $0.4 million for antidepressant new prescriptions in the treated counties of our analytical sample alone.