Endogeneity in Brand Choice Models
Management Science
A Dynamic Competitive Forecasting Model Incorporating Dyadic Decision Making
Management Science
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Patients increasingly request their physicians to prescribe specific brands of pharmaceutical drugs. A popular belief is that requests are triggered by direct-to-consumer advertising DTCA. We examine the relationship between DTCA, patient requests, and prescriptions for statins. We find that although the effect of requests on prescriptions is significantly positive, the mean effect of DTCA on patient requests is negative, yet very small. More interestingly, both effects show substantial heterogeneity across physicians, which we uncover using a hierarchical Bayes estimation procedure. We find that specialists receive more requests than primary care physicians but translate them less into prescriptions. In addition, we find that the sociodemographic profile of the area a physician practices in moderates the effects of DTCA on requests and of requests on prescriptions. For instance, physicians from areas with a higher proportion of minorities i.e., blacks and Hispanics receive more requests that are less triggered by DTCA and are accomodated less frequently than physicians from areas with a lower proportion of minorities. Our results challenge managers to revisit the role of DTCA in stimulating patient requests. At the same time, they may trigger public policy concerns regarding physicians' accommodation of patient requests and the inequalities they may induce.