Haiden A. Huskamp (Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts, USA) Julie M. Donohue (Department of Health Policy and Management, University of Pittsburgh Graduate School of Public Health, Pittsburgh, Pennsylvania, USA) Catherine Koss (Feinberg School of Medicine, Northwestern University, Chicago, Illinois, USA) Ernst R. Berndt (Alfred P. Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA) Richard G. Frank (Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts, USA)
Abstract
Background: Previous research has shown that a manufacturer's promotional strategy for a brand name drug is typically affected by generic entry. However, little is known about how newer strategies to extend patent life, including product reformulation introduction or obtaining approval to market for additional clinical indications, influence promotion. Objective: To examine the relationships among promotional expenditures, generic entry, reformulation entry and new indication approval. Methods: We used quarterly data on national product-level promotional spending (including expenditures for physician detailing and direct-to-consumer advertising [DTCA], and the retail value of free samples distributed in physician offices) for selective serotonin reuptake inhibitors (SSRIs) over the period 1997-2004. We estimated econometric models of detailing, DTCA and total quarterly promotional expenditures as a function of the timing of generic entry, entry of new product formulations and US FDA approval for new clinical indications for existing medications in the SSRI class. Expenditures by pharmaceutical manufacturers for promotion of antidepressant medications was the main outcome measure. Results: Over the period 1997-2004, there was considerable variation in the composition of promotional expenditures across the SSRIs. Promotional expenditures for the original brand molecule decreased dramatically when a reformulation of the molecule was introduced. Promotional spending (both total and detailing alone) for a specific molecule was generally lower after generic entry than before, although the effect of generic entry on promotional spending appears to be closely linked with the choice of product reformulation strategy pursued by the manufacturer. Detailing expenditures for Paxil(R) were increased after the manufacturer received FDA approval to market the drug for generalized anxiety disorder (GAD), while the likelihood of DTCA outlays for the drug was not changed. In contrast, FDA approval to market Paxil(R) and Zoloft(R) for social anxiety disorder (SAD) did not affect the manufacturers' detailing expenditures but did result in a greater likelihood of DTCA outlays. Conclusion: The introduction of new product formulations appears to be a common strategy for attempting to extend market exclusivity for medications facing impending generic entry. Manufacturers who introduced a reformulation before generic entry shifted most promotion dollars from the original brand to the reformulation long before generic entry, and in some cases manufacturers appeared to target a particular promotion type for a given indication. Given the significant impact that pharmaceutical promotion has on demand for prescription drugs in the US, these findings have important implications for prescription drug spending and public health.
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Article provided by Wolters Kluwer Health | Adis in its journal PharmacoEconomics.
Find related papers by JEL classification: C - Mathematical and Quantitative Methods D - Microeconomics I - Health, Education, and Welfare Z - Other Special Topics I1 - Health, Education, and Welfare - - Health I19 - Health, Education, and Welfare - - Health - - - Other I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets