Micro Seminars EUR

Speaker(s)
Ian Larkin (Harvard University and University of California Los Angeles, United States)
Date
Thursday, 19 June 2014
Location
Rotterdam

Pharmaceutical companies spend over twice as much on marketing products to physicians than they do on research and development. The majority of this spending is on “detailing” of physicians, where salespeople undertake sales calls in a physician’s office. These visits include discussions around products, but they also usually involve the provision of small personal gifts such as meals, branded items or inexpensive medical equipment. There has been significant controversy around whether and how detailing visits influence physicians, and the appropriateness of gift giving. However, existing studies are contradictory on whether physicians are influenced by informational sources or psychological ones (such as reciprocity induced by gift giving) are mixed, due to data constraints and severe endogeneity problems. We use quasi-exogenous changes to permitted interactions between physicians and pharma salespeople enacted at a number of large Academic Medical Centers (AMCs) in the US to provide the first large-scale, quasi-experimental evidence of the extent to which physicians are influenced by information vs. psychological mechanisms. We find that banning personal gifts to physicians causes a large drop in market shares of detailed drugs, but regulating salesperson access to physicians leads to no incremental drop. This suggests that salesperson influence over physician prescribing is largely non-informational in nature.