Direct and spillover promotional effects on drug prescriptions: Comparing differential physician- vs. patient-focused promotional effects

Abstract

We examine the impact of marketing strategies on new prescriptions. Companies promote drugs to both physicians, prescribing medications, and patients. We examine two antidepressant classes—SSRIs and SNRIs—highlighting two key findings: (1) Physician-targeted promotions, such as detailing, samples, and journal advertising, are more effective than patient-targeted promotions, direct-to-consumer advertising (DTCA), in their direct effects on drug adoption. (2) Physician-focused promotions exhibit stronger spillover effects on competing brands than patient-focused promotions. We emphasize that physicians, as agents with medical expertise, are the primary decision-makers, while patients have limited influence on their prescriptions. Agency theory provides a rationale for the differential promotional effects, as the interests of physicians and patients diverge, and physicians have superior medical expertise and knowledge on a drug’s efficacy and safety. Our findings provide evidence for companies to reallocate their resources from DTCA to physician-targeted promotions. This policy leads to lower costs of patent-protected drugs for patients.