The Impact of Physician Payment Sunshine Act on Physician Prescribing Behavior: Evidence from Medicare Part D

BACKGROUND: The 2014 Physician Payment Sunshine Act requires public reporting of payments to physicians from pharmaceutical companies. This study is among the first to provide empirical evidence on the impact of the Sunshine Act on physicians’ prescribing behavior.

METHOD: We use Medicare Part D Fee-for-Service Physician Utilization and Payment Data in 2013-2015 in the 9 northeastern states. We adopt a difference-in-difference approach by comparing physician prescription patterns in six treatment states, which adopted the Sunshine Act in 2014, with three control states, which implemented payment disclosure policies in the 2000s, before and after 2014.

RESULTS: We find that both the volume (measured by the number of claims) of and total spending on brand name drugs dropped significantly in the treatment states after adoption of the Sunshine Act (by 8% and 13% respectively), relative to the control states. There were no significant differences in changes in generic drug prescribing between treatment and control states during the same time.

CONCLUSION: Our findings indicate that payment disclosure can help control the prescription of brand name drugs, likely by reducing physicians’ financial incentives to prescribe those drugs.