The Impact of Information Technology on the Diffusion of New Pharmaceuticals

66 Pages Posted: 1 Dec 2017 Last revised: 4 Sep 2018

See all articles by Kenneth J. Arrow

Kenneth J. Arrow

Stanford University - Department of Economics

Kamran Bilir

University of Wisconsin - Madison - Department of Economics

Alan T. Sorensen

National Bureau of Economic Research (NBER)

Date Written: March 2017

Abstract

Do information differences across U.S. physicians contribute to treatment disparities? This paper uses a unique new dataset to evaluate how changes in physician access to a decision-relevant drug database affect prescribing decisions. Our results indicate that doctors using the reference have a significantly greater propensity to prescribe generic drugs, are faster to begin prescribing new generics, and prescribe a more diverse set of products. Notably, physicians using the reference database are not faster to prescribe new branded drugs. Given that a new generic drug resembles its branded equivalent clinically, these results are consistent with database users responding primarily to the increased accessibility of non-clinical information such as drug price and insurance formulary data; the results also suggest improvements to physician information access have important aggregate implications for the costs and efficiency of medical care. We address possible selection effects in physician types by relying on within-doctor variation and an instrument for adoption timing that is based on the marketing strategy of the drug reference firm.

Suggested Citation

Arrow, Kenneth J. and Bilir, Kamran and Sorensen, Alan T., The Impact of Information Technology on the Diffusion of New Pharmaceuticals (March 2017). NBER Working Paper No. w23257. Available at SSRN: https://ssrn.com/abstract=2937527

Kenneth J. Arrow

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

Kamran Bilir (Contact Author)

University of Wisconsin - Madison - Department of Economics ( email )

Madison, WI 53706
United States

Alan T. Sorensen

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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