Pharmaceutical promotion and GP prescription behaviour

Area of Science:

• Health Economics
• Pharmaceutical Marketing
• Medical Practice Management

Background:

• Promotional activities by pharmaceutical companies influence general practitioners' (GPs) prescribing habits.
• While promotion can inform, it may also decrease price sensitivity and maintain market share for higher-priced drugs.

Purpose of the Study:

• To empirically analyze the impact of pharmaceutical promotional activities on GPs' responses to ethical drugs.
• To investigate how promotion affects GPs' price sensitivity and prescribing behavior.

Main Methods:

• An econometric model was estimated using aggregate monthly GP prescription data and drug promotion expenditures (1994-1999).
• The model utilized panel data for 11 therapeutic markets in the Netherlands, controlling for drug-specific effects and habit persistence.
• Price effect identification was enhanced by the Pharmaceutical Prices Act of 1996.

Main Results:

• General practitioners exhibit low price sensitivity for ethical drugs.
• Promotional expenditures by pharmaceutical companies were found to adversely affect GPs' price sensitivity.
• Promotion appears to be a strategy for maintaining market share rather than reflecting therapeutic value.

Conclusions:

• Pharmaceutical promotion significantly diminishes GPs' sensitivity to drug prices.
• Interventions aimed at increasing price awareness among GPs may be necessary.
• The findings have implications for pharmaceutical market regulation and healthcare policy.