ABSTRACT
Prescription drug demand, like many empirically important economic decisions, involves a choice between discrete alternatives. Initially, the decision whether or not to begin a regimen of pharmaceutical treatment is a binary one. The choices are to treat a patient’s condition with prescription drugs or monitor it without them. While the decision to prescribe a drug is normally made by a physician, the agency relationship that exists between doctor and patient can be an imperfect one (as discussed in Chapter 5). Informational asymmetries that exist between the principal and agent can have ramifications on not only a doctor’s choice of treatment but also a patient’s health. When the decision to initiate pharmaceutical care is affirmative, the physician and patient will often encounter a complex set of alternatives with multiple drugs from which to choose in a therapeutic class. Moreover, the choice between products, like any economic choice, involves the evaluation of available options in terms of cost or price.
