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American Economic Journal: Economic Policy: Vol. 2 No. 4 (November 2010)

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The Effects of Pharmaceutical Marketing and Promotion on Adverse Drug Events and Regulation

Article Citation

David, Guy, Sara Markowitz, and Seth Richards-Shubik. 2010. "The Effects of Pharmaceutical Marketing and Promotion on Adverse Drug Events and Regulation." American Economic Journal: Economic Policy, 2(4): 1-25.

DOI: 10.1257/pol.2.4.1

Abstract

This paper analyzes the relationship between postmarketing promotional activity and reporting of adverse drug reactions (ADRs) by modeling the interaction between a regulator (the FDA) and a pharmaceutical firm. Promotion-driven market expansions enhance profitability yet may involve the risk of inappropriate drug prescriptions, leading to regulatory actions against the firm. We empirically test the relationship between drug promotion and reporting of ADRs using an innovative combination of commercial data on pharmaceutical promotion and FDA data on regulatory interventions and ADRs. We provide some evidence that increased levels of promotion and advertising lead to increased reporting of ADRs for certain conditions. (JEL L51, L65, M31, M37)

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Authors

David, Guy (U PA)
Markowitz, Sara (Emory U)
Richards-Shubik, Seth (Carnegie Mellon U)

JEL Classifications

L51: Economics of Regulation
L65: Chemicals; Rubber; Drugs; Biotechnology
M31: Marketing
M37: Advertising

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