Does self-dispensing lead to fewer generics?

In many German-speaking cantons in Switzerland, doctors are allowed to dispense medication directly to their patients in the surgery, a practice known as self-dispensing. Only in the cantons of Basel-Stadt and Aargau is this generally prohibited, while there are certain restrictions in Bern and Graubünden. This regulation has its roots in rural care, where access to pharmacies is often limited. In addition, self-dispensing obviously reflects a need of the population, as shown by cantonal votes in recent years.

While patients benefit from self-dispensing, at least in terms of time, because they save themselves a trip to the pharmacy, it creates negative incentives for doctors. As they earn a margin on every medication dispensed, they can supplement their income by dispensing additional or more expensive medication. The additional costs would have to be borne by patients and premium payers. However, doctors also act in the interests of their patients - their own benefit is therefore subordinated to the patient's benefit. It therefore seems unlikely that doctors will give their patients medication that they do not need. Ultimately, it is an empirical question as to whether and to what extent the negative incentives lead to additional costs. However, this question cannot be answered simply because whether a doctor dispenses medication and reacts to the financial incentives depends on many factors, some of which are not observable. For example, dispensing medication is much more worthwhile for doctors whose patients need a lot of medication than for doctors who hardly prescribe any medication. Self-selection based on the decision of the individual doctor to dispense or not could therefore lead to false conclusions in a direct comparison of the medication costs of self-dispensing and non-self-dispensing doctors.

That is why we are focussing here on the canton of Zurich. Since 1951, doctors in the cities of Winterthur and Zurich had been prohibited from dispensing medicines to patients, while self-dispensing was permitted in the rest of the canton. Following a cantonal popular initiative, which was approved by 53.7% of the population on 30 November 2008, self-dispensing was also to be permitted in the canton's two largest cities from 2010. However, various legal disputes led to delays, which is why doctors were only allowed to dispense medication in the cities of Winterthur and Zurich from the beginning of May 2012. This scenario offers us a "natural experiment": the doctors outside the cities serve as a control group, as they have not experienced any change and we therefore do not expect any changes in behaviour. We can therefore observe the behaviour of doctors before and after the introduction of self-dispensing and compare doctors inside and outside the two cities. This difference-in-differences approach allows us to estimate the causal effect of self-dispensing on doctors' prescribing and dispensing behaviour.

Our estimates show that the annual medication costs per patient have risen by a total of CHF 20 to 30 as a result of self-dispensing, which corresponds to an increase of around four to five per cent. The chart shows two separate effects of the regulatory change. On the one hand, there is the expected shift in the dispensing of medicines from pharmacies to doctors, which we refer to as "substitution". This increases the turnover of doctors, even if they do not change their behaviour. On the other hand, total costs increase so much that this cannot be explained by this shift alone. This suggests that physicians could additionally increase their revenues through their choice of dispensed preparations. We therefore analysed which strategies were used for this purpose. We found that doctors were neither treating more patients with medication nor prescribing higher doses. Instead, they chose pack sizes and medicines that were more profitable for them. In other words, they optimise margins while maintaining the same prescribing practice. Finally, it is also apparent that not everyone reacts in the same way to the financial incentives of self-dispensing: For doctors whose patients are insured under an alternative insurance model (e.g. GP model), there is no significant effect on medication costs. The additional costs were therefore mainly caused by doctors who do not work within the framework of a managed care model.

The question of whether self-dispensing should therefore be banned cannot be answered unequivocally from a health economics perspective. On the one hand, the population not only has a say, but also bears the financial consequences of its decision itself. If the population of a canton is prepared to accept higher drug costs for the dispensing of medicines by doctors, then this should be accepted. Looking at past votes in the cantons of Aargau (2013), Zurich (2008) and Schaffhausen (2012), there certainly seem to be differences in preference that can be mapped with today's cantonal sovereignty. The contribution of health economics here is therefore to estimate the cost consequences as precisely as possible and thus enable a well-founded decision to be made. On the other hand, there is a more elegant solution that could eliminate the disincentives without conflicting with the preferences of parts of the population: Incentive-neutral margins. A price-independent design of the margins would also have the advantage of eliminating disincentives for pharmacies. This solution is currently being discussed politically. It may therefore be possible to analyse in future whether and how the dispensing of medicines will actually change as a result.