This paper investigates the role of physicians and their prescriptions in the opioid epidemic. In order to disentangle the supply behaviour of doctors from the demand behaviour of patients, I leverage the staggered introduction of Medicaid expansion across states to exogenously shift opioid supply. Crucially, I argue that Medicaid expansion is composed of two distinct periods. The first is the pre-expansion announcement period. I argue that during the pre-expansion period, because eligible individuals have yet to receive their coverage there is no change in patient demand or disease burden. However, once the policy is announced, physicians and pharmaceutical firms may change their supply-side behaviour in anticipation of future profits from Medicaid expansion. The second period captures the de-facto expansion of health insurance, which is likely to affect patient demand for pharmaceutical products. Focusing my analysis on the announcement period, I show that pharmaceutical firms respond in advance of policy implementation, increasing the number and value of promotions of opioid products to physicians. These effects are driven by counties with the largest program-eligible population. Using difference-indifferences, I identify an increase in prescription opioid sales over this same period. I also find that increased promotions and prescriptions are associated with an increase in opioid-related deaths in the short-run, which do not appear to be persistent 1 year post-announcement.
DATE: Monday, January 10, 2022
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