Olivier Richard, Susan Suponcic, and Larry Van Horn

"Persistence in prescriptions of branded drugs"
JEL codes: L11, I11, C15
Keywords: market structure, advertising, Monte Carlo estimation, phamaceutical drugs

Abstract: The American Medical Association and the Pharmaceutical Research and Manufacturers of America have developed new standards to curb the influence sales representatives may have on physicians' drug choices. Yet the literature fails to clarify the extent to which shares of prescriptions for branded drugs are driven by advertising to physicians or by usage persistence in choices. Using unique aggregate data on major Therapeutic Classes (i.e. Statins, SSRIs, COX2s), we show that a majority of prescriptions are best characterized as automatic renewals for current users. Choice probabilities across all other prescriptions seem driven by brand attributes rather than promotion to physicians.

Pre-publication pdf copy, appendix, tables.