Asymmetric Social Interactions in Physician Prescription Behavior: The Role of Opinion Leaders

Abstract

We quantify the impact of social interactions and peer effects in the context of prescription choices by physicians. Using detailed individual-level prescription data, along with self-reported social network information, we document that physician prescription behavior is significantly influenced by the behavior of research-active specialists, or "opinion leaders" in the physician's reference group. We leverage a natural experiment in the category, whereby new guidelines released about the therapeutic nature of the focal drug generated conditions where physicians were more likely to be influenced by the behavior of specialist physicians in their network. We find important, statistically significant peer effects that are robust across model specifications. We use the estimates to measure the incremental value to firms of directing targeted sales-force activity to these opinion leaders, and present estimates of the social multiplier of detailing in this category.

Keywords: Social Interactions, Peer effects, Social Multiplier, Contagion, Physician Prescription Behavior, Pharmaceutical Industry

JEL Classification: L65, M30, M31