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The Effects of Pharmaceutical Marketing and Promotion on Adverse Drug Events and Regulation

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  • Guy David
  • Sara Markowitz
  • Seth Richards-Shubik

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. (JEL L51, L65, M31, M37)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 2 (2010)
Issue (Month): 4 (November)
Pages: 1-25

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Handle: RePEc:aea:aejpol:v:2:y:2010:i:4:p:1-25

Note: DOI: 10.1257/pol.2.4.1
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  1. Brekke, Kurt R. & Kuhn, Michael, 2003. "Direct-to-Consumer Advertising in Pharmaceutical Markets," Working Papers in Economics 05/03, University of Bergen, Department of Economics.
  2. Nava Ashraf & James Berry & Jesse M. Shapiro, 2010. "Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia," American Economic Review, American Economic Association, vol. 100(5), pages 2383-2413, December.
  3. Rizzo, John A, 1999. "Advertising and Competition in the Ethical Pharmaceutical Industry: The Case of Antihypertensive Drugs," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 89-116, April.
  4. Niklas Rudholm, 2004. "Approval times and the safety of new pharmaceuticals," The European Journal of Health Economics, Springer, vol. 5(4), pages 345-350, November.
  5. Toshiaki Iizuka & Ginger Zhe Jin, 2005. "The Effect of Prescription Drug Advertising on Doctor Visits," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 701-727, 09.
  6. John E. Calfee & Clifford Winston & Randolph Stempski, 2002. "Direct-to-Consumer Advertising and the Demand for Cholesterol-Reducing Drugs," Journal of Law and Economics, University of Chicago Press, vol. 45(S2), pages 673-690.
  7. Dehez, Pierre & Jacquemin, Alex, 1975. "A Note on Advertising Policy under Uncertainty and Dynamic Conditions," Journal of Industrial Economics, Wiley Blackwell, vol. 24(1), pages 73-78, September.
  8. Olson, Mary K., 2004. "Are novel drugs more risky for patients than less novel drugs?," Journal of Health Economics, Elsevier, vol. 23(6), pages 1135-1158, November.
  9. Mary K. Olson, 2002. "Pharmaceutical Policy Change and the Safety of New Drugs," Journal of Law and Economics, University of Chicago Press, vol. 45(S2), pages 615-642.
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Cited by:
  1. Mary Olson, 2013. "Eliminating the U.S. drug lag: Implications for drug safety," Journal of Risk and Uncertainty, Springer, vol. 47(1), pages 1-30, August.

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