Learning about new products: an empirical study of physicians' behavior
Maria Marta Ferreyra1, Grigory Kosenok
1Carnegie Mellon University, Pittsburgh.
Economic Inquiry
|October 26, 2011
Summary
Physicians
Area of Science:
- Pharmaceutical market demand modeling
- Physician decision-making in drug prescribing
- Health economics of new drug adoption
Background:
- Market demand for new pharmaceuticals depends on physician learning about drug quality.
- Physicians are forward-looking and update beliefs based on prescription data.
- Understanding physician behavior is crucial for new drug market success.
Observation:
- A panel of antiulcer prescriptions from Italian physicians (1990-1992) was analyzed.
- Focus was on a new pharmaceutical molecule introduced in 1990.
- Physicians' optimal decision rules were modeled based on their beliefs.
Findings:
- Initial physician pessimism and uncertainty significantly reduced new drug prescription rates.
- These informational barriers negatively impacted expected patient health outcomes.
- Subsidies for the new pharmaceutical can counteract these negative effects.
Implications:
- Policy interventions like subsidies can accelerate adoption of beneficial new drugs.
- Addressing physician uncertainty is key to maximizing public health benefits from innovation.
- Market dynamics for pharmaceuticals are heavily influenced by information asymmetry and learning.
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