Measuring the Informative and Persuasive Roles of Detailing on Prescribing Decisions

Abstract

In the pharmaceutical industry, measuring the importance of informative and persuasive roles of detailing is crucial for both drug manufacturers and policy makers. However, little progress has been made in disentangling these two roles of detailing in empirical research. In this paper, we provide a new identification strategy to address this problem. Our key identification assumptions are that the informative component of detailing is chemical specific while the persuasive component is brand specific. Our strategy is to focus on markets where some drug manufacturers engage in a co-marketing agreement, under which two companies market the same chemical using two different brand-names. With our identification assumptions, the variations in the relative market share of these two brands, together with their brand specific detailing efforts, would allow us to measure the persuasive component of detailing. The variations in the market share of chemicals, and the detailing efforts summed across brands made of the same chemical, would allow us to measure the informative component of detailing. Using the data for ACE-inhibitor with diuretic in Canada, we find evidence that our identification strategy can help identify these two effects. Although both effects are statistically significant, we find that the persuasive function of detailing plays a very minor role in determining the demand at the chemical level -- the informative role of detailing is mainly responsible for the diffusion patterns of chemicals. In contrast, the persuasive role of detailing plays a crucial role in determining the demand for brands which co-market the same chemical. We also find that patients could be worse off if the government bans detailing for ACE-inhibitor with diuretic.

Keywords: Detailing, Informative Role, Persuasive Role, Prescription Drugs, Decisions under Uncertainty, Diffusion

JEL Classification: D83, I11, I18, M31, M37, M38