The Effects of Competition on Physician Prescribing

This study investigates how competition influences the prescribing practices of physicians. U.S. state law changes granting nurse practitioners (NPs) the authority to prescribe controlled substances without physician oversight generate exogenous increases in competition by expanding patients’ options when seeking care. In response, we find that general practice physicians (GPs)—the physician specialty that competes most directly with NPs—significantly increase their prescribing of opioids and controlled anti-anxiety medications. GPs also increase their co-prescribing of opioids and benzodiazepines, a practice that violates prescribing guidelines. These effects are more pronounced in areas with more NPs per GP at baseline and lead to sizable increases in fatal drug overdoses. In contrast, we observe no changes in prescribing among physician specialties that do not compete with NPs, nor in the prescribing of drug classes not directly affected by the law changes. Our findings are consistent with a simple model of physician behavior in which competition for patients leads physicians to move toward the preferences of marginal patients. These results demonstrate that more competition will not always lead to improvements in patient care and can instead lead to excessive service provision.