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Prescription Drug Advertising and Patient Compliance: A Physician Agency Approach

Author

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  • Armantier Olivier

    () (Université de Montréal)

  • Namoro Soiliou

    () (University of Pittsburgh)

Abstract

This paper proposes an analysis of both doctors and patients' behavior in an agency model that accounts for the interplay between two highly debated health issues: drug advertising toward doctors and/or patients, and the serious problem of patients' noncompliance with their doctors' prescriptions. Due to the lack of individual data, we propose a structural approach inspired from the industrial organization literature. The model is estimated semiparametrically with product level data on the U.S. market for anti-glaucoma drugs. The results suggest that doctors' prescriptions are directly influenced by the probability of noncompliance, as well as advertising aimed at both doctors and patients. Advertisement toward patients (respectively, doctors) appears to have contributed to (respectively, slowed down) the reduction of the estimated average noncompliance rate.

Suggested Citation

  • Armantier Olivier & Namoro Soiliou, 2006. "Prescription Drug Advertising and Patient Compliance: A Physician Agency Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-41, September.
  • Handle: RePEc:bpj:bejeap:v:advances.6:y:2006:i:1:n:5
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    References listed on IDEAS

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    Cited by:

    1. Anna Merino, 2003. "Demand for pharmaceutical drugs: A choice modelling experiment," Working Papers, Research Center on Health and Economics 704, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Anna Merino, 2003. "Demand for pharmaceutical drugs: A choice modelling experiment," Economics Working Papers 704, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Guy David & Sara Markowitz, 2011. "Side Effects of Competition: the Role of Advertising and Promotion in Pharmaceutical Markets," NBER Working Papers 17162, National Bureau of Economic Research, Inc.

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