Healthy Skepticism Library item: 3552

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

Hurwitz MA, Caves RE.
Persuasion or information? Promotion and the shares of brand name and generic pharmaceuticals
Journal of Law and Economics 1988; 31:299-320

Abstract:

Sales promotion outlays for new pharmaceuticals both convey information and seek rents for their innovators. This study attempts to weigh the balance of these factors by examining the markets for drug products whose patents have expired, bringing their innovators into competition with entrants offering the same drug under its generic name. The finding is that the trademark holders’ sales promotion outlays do preserve their shares against incursion by generic entrants. This effect is independent of the preservative effect of goodwill stocks built up during the period when the innovative drug was marketed exclusively on patent. The evidence is consistent with a “persuasiveâ€ role for innovators’ promotion outlays both in building up the goodwill stock under patent and preserving loyalty afterward. But of course it does not deny an important informative fucntion in the promotion of new drugs.

Keywords:
*mathematical modeling/United States/market share/ competitive consequences of promotion/ generics/INFLUENCE OF PROMOTION: MARKET SHARE

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Far too large a section of the treatment of disease is to-day controlled by the big manufacturing pharmacists, who have enslaved us in a plausible pseudo-science...
The blind faith which some men have in medicines illustrates too often the greatest of all human capacities - the capacity for self deception...
Some one will say, Is this all your science has to tell us? Is this the outcome of decades of good clinical work, of patient study of the disease, of anxious trial in such good faith of so many drugs? Give us back the childlike trust of the fathers in antimony and in the lancet rather than this cold nihilism. Not at all! Let us accept the truth, however unpleasant it may be, and with the death rate staring us in the face, let us not be deceived with vain fancies...
we need a stern, iconoclastic spirit which leads, not to nihilism, but to an active skepticism - not the passive skepticism, born of despair, but the active skepticism born of a knowledge that recognizes its limitations and knows full well that only in this attitude of mind can true progress be made.
- William Osler 1909