We are very grateful to Elliot Ash, Albert Banal-Estanol, Tomaso Duso, Shan Huang, Paolo Pertile, Julien Sauvagnat, Fiona Scott Morton, Jo Seldeslachts, Otto Toivanen, Hannes Ullrich and Frank Verboven for helpful comments. We also thank the Austrian Economic Association (NOeG) for awarding our paper the Young Economist Award 2023. This paper also benefited from comments in seminars and conferences at the EuHEA Seminar Series, DIW Berlin, the ETH/UZH Seminar in Economics & Data Science, UZH Business Department Seminar, the Zurich Political Economy Seminar Series and SESS Annual Congress. Parts of this research originate from a chapter of Newham’s Ph.D. dissertation. A previous version of this paper was titled “Who Pays for Gifts to Physicians? Heterogeneous Effects of Industry Payments on Drug Costs”. The authors declare that they have no relevant or material financial interests that relate to the research described in this paper.