Abstract

http://ssrn.com/abstract=2046174
 


 



New Drug Diffusion When Forward-Looking Physicians Learn from Patient Feedback and Detailing


Pradeep K. Chintagunta


University of Chicago

Ronald L. Goettler


University of Rochester - Simon School of Business

Minki Kim


KAIST (Korea Advanced Institute of Science and Technology)

March 30, 2012

Chintagunta, Pradeep K., Ronald L. Goettler, and Minki Kim, "New Drug Diffusion When Forward-Looking Physicians Learn from Patient Feedback and Detailing," Journal of Marketing Research, vol. 49, (December 2012) 807-821.

Abstract:     
We study physicians' prescription choices when uncertainty about drug efficacy is resolved through two channels: firms' marketing activities (e.g., detailing) and patients' experiences with the drugs. We first provide empirical evidence that suggests the well-understood information incentive for physicians to experiment with new drugs is reduced when physicians anticipate future detailing. Increased detailing activity therefore triggers opposing forces: adoption is hastened as physicians become informed (assuming priors are initially low), and slows as they reduce experimentation and instead obtain information from detailing at no cost. We then estimate a dynamic Bayesian learning model that embodies these trade-offs using physician-level data on prescription choices and detailing received in the months surrounding the introduction of two erectile dysfunction drugs, Levitra and Cialis. Detailing elasticities are lower when physicians anticipate changes in detailing activity than when such changes are unexpected. Accordingly, to maximize the effect of detailing, firms should avoid announcing increases in detailing activities.

Number of Pages in PDF File: 43

Keywords: uncertainty, learning, dynamic discrete choice, new drug diffusion

JEL Classification: D12, L21, M31

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Date posted: April 26, 2012 ; Last revised: September 18, 2013

Suggested Citation

Chintagunta, Pradeep K. and Goettler, Ronald L. and Kim, Minki, New Drug Diffusion When Forward-Looking Physicians Learn from Patient Feedback and Detailing (March 30, 2012). Chintagunta, Pradeep K., Ronald L. Goettler, and Minki Kim, "New Drug Diffusion When Forward-Looking Physicians Learn from Patient Feedback and Detailing," Journal of Marketing Research, vol. 49, (December 2012) 807-821.. Available at SSRN: http://ssrn.com/abstract=2046174

Contact Information

Pradeep K. Chintagunta
University of Chicago ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-8015 (Phone)
773-702-0458 (Fax)
Ronald L. Goettler (Contact Author)
University of Rochester - Simon School of Business ( email )
Rochester, NY 14627
United States
Minki Kim
KAIST (Korea Advanced Institute of Science and Technology) ( email )
KAIST Business School
85 HOEGIRO DONGDAEMOON-GU
Seoul, 130-722
Korea, Republic of (South Korea)
+82-2-958-3512 (Phone)
HOME PAGE: http://https://sites.google.com/site/minkikimquant/
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