Health Care Management Papers
Document Type
Working Paper
Date of this Version
6-2011
Publication Source
National Bureau of Economic Research Working Papers Series
DOI
10.3386/w17162
Abstract
The extent of pharmaceutical advertising and promotion can be characterized by a balancing act between profitable demand expansions and potentially unfavorable subsequent regulatory actions. However, this balance also depends on the nature of competition (e.g. monopoly versus oligopoly). In this paper we model the firm's behavior under different competitive scenarios and test the model's predictions using a novel combination of sales, promotion, advertising, and adverse event reports data. We focus on the market for erectile dysfunction drugs as the basis for estimation. This market is ideal for analysis as it is characterized by an abrupt shift in structure, all drugs are branded, the drugs are associated with adverse health events, and have extensive advertising and promotion. We find that advertising and promotion expenditures increase own market share but also increase the share of adverse drug reactions. Competitors' spending decreases market share, while also having an influence on adverse drug reactions.
Recommended Citation
David, G., & Markowitz, S. (2011). Side Effects of Competition: The Role of Advertising and Promotion in Pharmaceutical Markets. National Bureau of Economic Research Working Papers Series, http://dx.doi.org/10.3386/w17162
Included in
Health and Medical Administration Commons, Pharmacoeconomics and Pharmaceutical Economics Commons, Pharmacy Administration, Policy and Regulation Commons
Date Posted: 27 November 2017
Comments
This is a working paper, not accepted for publication or review.