Offering Pharmaceutical Samples: The Role of Physician Learning and Patient Payment Ability

6 Pages Posted: 10 Nov 2013

See all articles by Ram Bala

Ram Bala

Santa Clara University - Leavey School of Business

Pradeep Bhardwaj

University of California, Los Angeles (UCLA) - Marketing Area

Yuxin Chen

Northwestern University - Department of Marketing

Date Written: November 9, 2013

Abstract

Physicians may learn about prescription drug effectiveness directly from the firm via detailing or from patient experience. Patient-mediated learning is aided by the use of free drug samples. The effective use of samples is hampered by a lack of understanding of its exact return on investment implications. We seek to fill this gap by incorporating the physician's sample allocation behavior in the firm's decision making. We uncover the following implications for firms as well as policy makers. First, we find that the optimal sampling level for a drug category is a nonmonotonic function of patient payment ability and the price of the drug. Second, an increase in the cost of samples can lead to an increase in sampling and a decrease in detailing when the physician's propensity to provide sample subsidies is high. Third, when future market growth is expected to be high (early stage product life cycle and/or chronic drugs) and sampling efficiency is low, the use of sampling is profitable for the firm but leads to lower market coverage than when sampling is disallowed.

Keywords: pharmaceutical marketing, sampling, detailing, patient payment ability

Suggested Citation

Bala, Ram and Bhardwaj, Pradeep and Chen, Yuxin, Offering Pharmaceutical Samples: The Role of Physician Learning and Patient Payment Ability (November 9, 2013). Marketing Science, Vol. 32, No. 3, 2013; pp. 522-527; DOI: 10.1287/mksc.1120.0743. Available at SSRN: https://ssrn.com/abstract=2328592

Ram Bala (Contact Author)

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States

Pradeep Bhardwaj

University of California, Los Angeles (UCLA) - Marketing Area ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Yuxin Chen

Northwestern University - Department of Marketing ( email )

Kellogg School of Management
2001 Sheridan Rd.
Evanston, IL 60208
United States

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