Drug therapy adherence and health outcomes in the presence of physician and patient unobserved heterogeneity.

Understanding the role that drug adherence has on health outcomes in everyday clinical practice is central for the policy maker. This is particularly true when patients suffer from asymptomatic chronic conditions (e.g., hypertension, hypercholesterolaemia, and diabetes). By exploiting a unique longitudinal dataset at patient and physician level in Italy, we show that patients and physicians unobserved characteristics play an important role in determining health status, at least as important as drug adherence. Most importantly, we find that both adherence and prescribed treatment regimen effects are highly heterogeneous across physicians, highlighting their crucial role in shaping patients' health status.