Pharma Payments and Physician Concentration: An Empirical Analysis

Abstract

This paper uses a rent-seeking framework to empirically examine the effect of physician concentration at the state level on the dollar amount of payments made to physicians from the pharmaceutical industry. Using OLS and 2-stage least squares, this paper finds increased physician concentration at the state level is associated with lesser payment amounts made to physicians from pharmaceutical companies for overall physician concentration and office-based physician concentration. The results for hospital-based concentration were mixed. These findings provide important insights for health policy literature regarding which factors reduce the propensity to rent-seeking to affect health care outcomes and costs.