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

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.

43 Pages Posted: 26 Apr 2012 Last revised: 18 Sep 2013

See all articles by Pradeep K. Chintagunta

Pradeep K. Chintagunta

University of Chicago

Ronald L. Goettler

University of Rochester - Simon School of Business

Minki Kim

KAIST College of Business

Date Written: March 30, 2012

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.

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

JEL Classification: D12, L21, M31

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: https://ssrn.com/abstract=2046174

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 College of Business ( email )

85 Hoegiro Dongdaemun-Gu
Seoul 130-722, 130-722
Korea, Republic of (South Korea)

Register to save articles to
your library

Register

Paper statistics

Downloads
200
rank
148,952
Abstract Views
1,320
PlumX Metrics