The obvious answer seems to be ‘yes’. Why would pharmaceutical companies spend billions of dollars on drug detailing (i.e., visits by pharmaceutical representatives to physicians to explain drug benefits) and drug samples if they don’t work? When I say billions, I mean billions:
A new study by Datta and Dave (2017), however, finds that drug detailing may not affect physicians in the way you might think.
The estimates suggest that detailing has a significant and positive effect on the number of new scripts written for the detailed drug, with an elasticity magnitude of 0.06. This effect is substantially smaller than those in the literature based on aggregate information, suggesting that most of the observed relationship between physician-directed promotion and drug sales is driven by selection bias. We find that detailing impacts selective brand-specific demand but does not have any substantial effects on class-level demand. The increase in brand-specific demand appears to crowd out demand for the substitute branded drug although not for the generic alternative. Results also indicate that most of the detailing response may operate at the extensive margin; detailing affects the probability of prescribing the drug more than it affects the number of prescriptions conditional on any prescribing.
The authors claim that their approach to this estimate is novel for three reasons. First they have a large nationally reprsentative data set with longitudinal data over a 24-month time period. Second, the use fixed effect to control for both unobserved physician-specific heterogeneity and the effect of detailing selection (i.e., representatives may be more likely to visit physicians already disposed to dispense their drug). Third, the authors also examine whether detailing increases the number of people using the drugs compared to the affect the number of prescriptions conditional on taking the treatment (these are the intensive and extensive findings).
In short, marketing works, but only when two products are clear branded substitutes for one another.
Datta, Anusua, and Dhaval Dave. “Effects of Physician‐directed Pharmaceutical Promotion on Prescription Behaviors: Longitudinal Evidence.” Health economics 26, no. 4 (2017): 450-468.
- Figure: Cegedim Strategic Data, 2012 U.S. Pharmaceutical Company Promotion Spending (2013), via the Pew Charitable Trust website.