Abstract
We identify the rate of off-label use of prescription drugs in the United States during 1993-2008. We apply Detection Controlled Estimation to a comprehensive cross-section of prescriptions and find that rates of off-label use rise from 30.2% to 39.1% during this period. This coincides with a surge in settlements of Department of Justice lawsuits for off-label marketing. Additionally, physicians are more likely to prescribe off-label when there are fewer FDA-approved alternatives and when a patient’s insurance has less restrictive formularies and lower copayments. These substitution patterns are consistent with off-label prescribing by physicians that enhances the welfare of patients.
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