Healthy Skepticism Library item: 19392

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Journal Article

Azoulay P
Do pharmaceutical sales respond to scientific evidence?
J Econ Manage Str 2002; 11:551–594
http://ideas.repec.org/a/bla/jemstr/v11y2002i4p551-594.html

Abstract:

I investigate how different sources of information influence the diffusion of pharmaceutical innovations. In prescription-drug markets, both advertising and scientific information stemming from clinical trials can affect physicians’ prescription choices. Using novel indices of clinical-research output, I find that both marketing and scientific evidence directly influence the diffusion process in the antiulcer-drug market, with marketing having a more pronounced influence. I also find evidence that clinical outputs are important drivers of firms’ marketing efforts, affecting sales indirectly. Taken together, the direct and indirect effects of science on demand imply strong private incentives for clinical research. I conclude that product-market competition in the pharmaceutical industry is shaped by both advertising rivalries and scientific rivalries. Moreover, drug advertising may perform an important informative function. Copyright © 2002 Massachusetts Institute of Technology.