The Effects of Detailing on Prescribing Decisions under Quality Uncertainty

Ching, Andrew and Ishihara, Masakazu (2007): The Effects of Detailing on Prescribing Decisions under Quality Uncertainty.

Abstract

We develop a structural model of detailing and prescribing decisions under an environment where detailing helps physicians obtain the current information sets about drug qualities. Our model assumes that a representative opinion leader is responsible for updating the prior belief about the quality of drugs via patients' experiences, and manufacturers use detailing as a means to build/maintain the measure of physicians who are informed of the current information sets. We estimate our model using data on sales, prices, and detailing minutes at the product level for ACE-inhibitor with diuretic in Canada. We quantify the marginal impact of detailing on current demand at different points in time, and demonstrate how it depends on the measure of well-informed physicians and the information sets. Furthermore, we conduct a policy experiment to examine how a public awareness campaign, which encourages physicians/patients to report their drug experiences, would affect managerial incentives to detail.

• Item Type: MPRA Paper
• Institution: Rotman School of Management, University of Toronto
• Language: English
• Keywords: Detailing; Prescription Drugs; Decisions Under Uncertainty; Bayesian Learning; Representative Opinion Leader; Diffusion
• Subjects: I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy ; Regulation ; Public Health; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C15 - Statistical Simulation Methods: General; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M3 - Marketing and Advertising > M31 - Marketing; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M3 - Marketing and Advertising > M37 - Advertising; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C35 - Discrete Regression and Qualitative Choice Models ; Discrete Regressors ; Proportions; I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets

References

Ching, Andrew. 2000. Dynamic Equilibrium in the U.S. Prescription Drug Market After Patent Expiration. Ph.D. dissertation, University of Minnesota.

Ching, Andrew. 2008. "A Dynamic Oligopoly Structural Model for the U.S. Prescription Drug Market After Patent Expiration," Working paper, Rotman School of Management, University of Toronto.

Ching, Andrew. 2008. "Consumer Learning and Heterogeneity: Dynamics of Demand for Prescription Drugs After Patent Expiration," Working paper, Rotman School of Management, University of Toronto.

Erdem, Tulin, Michael Keane. 1996. "Decision-making under Uncertainty: Capturing Dynamic Brand Choice Processes in Turbulent consumer Goods Markets," Marketing Science 15(1): 1-20.