Structural Models of the Prescription Drug Market

73 Pages Posted: 1 Apr 2019 Last revised: 10 May 2019

See all articles by Andrew T. Ching

Andrew T. Ching

Johns Hopkins University - Carey Business School

Manuel Hermosilla

Johns Hopkins University - Carey Business School

Qiang Liu

Purdue University - Krannert School of Management

Date Written: March 5, 2019

Abstract

Structural models have become a frontier tool in business and economics research. In this survey, we describe the literature on structural models for the prescription drug market, which has attracted a significant attention from researchers in marketing and economics, and related fields. The literature has evolved from adopting standard structural models developed for other markets to models that are specifically designed to capture the nuance of drug prescription behaviour. Along the way, these empirical frameworks have not only greatly improved in explaining stylized facts, but also at producing better (more reasonable) counterfactual predictions. Topics covered by this survey include the application of learning models to explain slow diffusion, post-patent expiry competition, pre-patent expiry competition, R&D and new drug introduction, managerial and public policy analysis, and the economics of the Medicare Part-D program. We conclude by discussing future research directions.

Keywords: Structural Models, Pharmaceutical Industry, Prescription Drugs, Detailing, Direct-to-consumer Advertising, Clinical Trials, Publicity

JEL Classification: C25, C35, I11, L13, M31, M37, M38

Suggested Citation

Ching, Andrew T. and Hermosilla, Manuel and Liu, Qiang, Structural Models of the Prescription Drug Market (March 5, 2019). Johns Hopkins Carey Business School Research Paper No. 19-01. Available at SSRN: https://ssrn.com/abstract=3348196 or http://dx.doi.org/10.2139/ssrn.3348196

Andrew T. Ching (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

Manuel Hermosilla

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

Qiang Liu

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
67
Abstract Views
422
rank
339,444
PlumX Metrics