Health Care Management Papers

Document Type

Journal Article

Date of this Version

11-2010

Publication Source

Amrican Economic Journal: Economic Policy

Volume

2

Issue

4

Start Page

1

Last Page

25

DOI

10.1257/pol.2.4.1

Abstract

This paper analyzes the relationship between postmarketing promotional activity and reporting of adverse drug reactions (ADRs) by modeling the interaction between a regulator (the FDA) and a pharmaceutical firm. Promotion-driven market expansions enhance profitability yet may involve the risk of inappropriate drug prescriptions, leading to regulatory actions against the firm. We empirically test the relationship between drug promotion and reporting of ADRs using an innovative combination of commercial data on pharmaceutical promotion and FDA data on regulatory interventions and ADRs. We provide some evidence that increased levels of promotion and advertising lead to increased reporting of ADRs for certain conditions.

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Date Posted: 27 November 2017

This document has been peer reviewed.