Drug Diffusion Through Peer Networks: The Influence of Industry Payments
- American Economic Journal: Economic Policy (Forthcoming)
Pharmaceutical companies market to physicians through individual detailing accompanied
by monetary or in-kind transfers. Large compensation payments to a small
number of physicians account for most of this promotional spending. Studying U.S.
promotional payments and prescriptions for anticoagulant drugs, we investigate how
peer influence broadens the payments’ reach. Following a compensation payment, prescriptions
for the marketed drug increase by both the paid physician and the paid
physician’s peers. Payments increase prescriptions to both recommended and contraindicated
patients. Over three years, marketed anticoagulant prescriptions rose 23
percent due to payments, with peer spillovers contributing a quarter of the increase.
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