Pharmaceutical Promotion and Gp Prescription Behaviour

CPB Discussion Paper No 30

44 Pages Posted: 24 Jun 2004

See all articles by Frank Windmeijer

Frank Windmeijer

University of Bristol - Department of Economics; University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO); Institute for Fiscal Studies (IFS) - Centre for Microdata Methods and Practice

Eric de Laat

Ministry of Health, Welfare and Sports

Rudy Douven

CPB Netherlands Bureau for Economic Policy Analysis; CPB Netherlands Bureau for Economic Policy Analysis

Esther Mot

CPB Netherlands Bureau of Economic Policy Analysis

Multiple version iconThere are 2 versions of this paper

Date Written: April 2004

Abstract

The aim of this paper is to empirically analyse the responses by general practitioners to promotional activities for pharmaceuticals by pharmaceutical companies. Promotion can be beneficial as a means of providing information, but it can also be harmful in the sense that it lowers price sensitivity of doctors and it merely is a means of maintaining market share, even when cheaper, therapeutically equivalent drugs are available. A model is estimated that includes interactions of promotion expenditures and prices and that explicitly exploits the panel structure of the data, allowing for drug specific effects and dynamic adjustments, or habit persistence. The data used are aggregate monthly GP prescriptions per drug together with monthly outlays on drug promotion for the period 1994-1999 for 11 therapeutic markets, covering more than half of the total prescription drug market in the Netherlands. Identification of price effects is obtained by the introduction of the Pharmaceutical Prices Act, which established that Dutch drugs prices became a weighted average of the prices in surrounding countries after June 1996. We conclude that GP drug price sensitivity is small, but adversely affected by promotion.

Keywords: Drug price elasticity, promotion expenditures, panel data

JEL Classification: C23, D42, D61

Suggested Citation

Windmeijer, Frank and de Laat, Eric and Douven, Rudy and Mot, Esther, Pharmaceutical Promotion and Gp Prescription Behaviour (April 2004). CPB Discussion Paper No 30, Available at SSRN: https://ssrn.com/abstract=536563 or http://dx.doi.org/10.2139/ssrn.536563

Frank Windmeijer (Contact Author)

University of Bristol - Department of Economics ( email )

8 Woodland Road
Bristol BS8 ITN
United Kingdom

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom

Institute for Fiscal Studies (IFS) - Centre for Microdata Methods and Practice

7 Ridgmount Street
London WC1E 7AE, WC1E 7 AE
United Kingdom

Eric De Laat

Ministry of Health, Welfare and Sports ( email )

Directorate GMT
PO Box 20350
2500EJ The Hague
Netherlands

Rudy Douven

CPB Netherlands Bureau for Economic Policy Analysis ( email )

P.O. Box 80510
The Hague, 2508 GM
Netherlands

HOME PAGE: http://www.cpb.nl/nl/org/homepages/rcmhd/

CPB Netherlands Bureau for Economic Policy Analysis ( email )

P.O. Box 80510
The Hague, 2508 GM
Netherlands

HOME PAGE: http://www.cpb.nl/nl/org/homepages/rcmhd/

Esther Mot

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

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