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The Impact of Information Technology on the Diffusion of New Pharmaceuticals

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Listed:
  • Kenneth J. Arrow
  • Kamran Bilir
  • Alan T. Sorensen

Abstract

Do information differences across U.S. physicians contribute to treatment disparities? This paper uses a unique new dataset to evaluate how changes in physician access to a decision-relevant drug database affect prescribing decisions. Our results indicate that doctors using the reference have a significantly greater propensity to prescribe generic drugs, are faster to begin prescribing new generics, and prescribe a more diverse set of products. Notably, physicians using the reference database are not faster to prescribe new branded drugs. Given that a new generic drug resembles its branded equivalent clinically, these results are consistent with database users responding primarily to the increased accessibility of non-clinical information such as drug price and insurance formulary data; the results also suggest improvements to physician information access have important aggregate implications for the costs and efficiency of medical care. We address possible selection effects in physician types by relying on within-doctor variation and an instrument for adoption timing that is based on the marketing strategy of the drug reference firm.

Suggested Citation

  • Kenneth J. Arrow & Kamran Bilir & Alan T. Sorensen, 2017. "The Impact of Information Technology on the Diffusion of New Pharmaceuticals," NBER Working Papers 23257, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23257 Note: HC IO
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    2. Forman, Chris & Goldfarb, Avi & Greenstein, Shane, 2005. "How did location affect adoption of the commercial Internet? Global village vs. urban leadership," Journal of Urban Economics, Elsevier, vol. 58(3), pages 389-420, November.
    3. Agha, Leila, 2014. "The effects of health information technology on the costs and quality of medical care," Journal of Health Economics, Elsevier, vol. 34(C), pages 19-30.
    4. Berndt, Ernst R. & Gibbons, Robert S. & Kolotilin, Anton & Taub, Anna Levine, 2015. "The heterogeneity of concentrated prescribing behavior: Theory and evidence from antipsychotics," Journal of Health Economics, Elsevier, vol. 40(C), pages 26-39.
    5. Leila Agha & David Molitor, 2015. "The Local Influence of Pioneer Investigators on Technology Adoption: Evidence from New Cancer Drugs," NBER Working Papers 20878, National Bureau of Economic Research, Inc.
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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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