The Effect of Medical Cannabis Laws on Pharmaceutical Marketing to Physicians

44 Pages Posted: 16 Sep 2020

See all articles by Thomas Lebesmuehlbacher

Thomas Lebesmuehlbacher

Xavier University

Rhet A. Smith

University of Arkansas at Little Rock - Department of Economics and Finance

Date Written: August 3, 2020

Abstract

Although cannabis is federally prohibited, a majority U.S. states have implemented medical cannabis laws (MCLs). As more individuals consider the drug for medical treatment, they potentially substitute away from prescription drugs. Therefore, an MCL signals competitor entry. This paper exploits geographic and temporal variation in MCLs to examine the strategic response in direct-to-physician marketing by pharmaceutical firms as cannabis enters the market. We use office detailing records from 2014-2018 aggregated to the county level and find detailing increases by 7\% in the quarter an MCL is proposed. The increase is temporary, however, and attenuates after MCL approval. We then incorporate physician-level cannabis recommendation data from Florida and find opioid detailing to cannabis-friendly doctors declines following MCL enactment. Although we find weak evidence of a similar decline in our primary analysis, the effects are muted at the aggregate level by the small percent of doctors that recommend cannabis.

Keywords: Cannabis, Medical Marijuana, Prescription Drugs, Competitor Entry, Detailing

JEL Classification: I11, L21, D22, D78

Suggested Citation

Lebesmuehlbacher, Thomas and Smith, Rhet, The Effect of Medical Cannabis Laws on Pharmaceutical Marketing to Physicians (August 3, 2020). Available at SSRN: https://ssrn.com/abstract=3666454 or http://dx.doi.org/10.2139/ssrn.3666454

Thomas Lebesmuehlbacher (Contact Author)

Xavier University ( email )

3800 Victory Parkway
Cincinnati, OH 45207
United States

Rhet Smith

University of Arkansas at Little Rock - Department of Economics and Finance ( email )

Little Rock, AR 72204
United States

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