IDEAS home Printed from https://ideas.repec.org/p/duk/dukeec/98-11.html
   My bibliography  Save this paper

Uncertainty and Experimentation in Pharmaceutical Demand: Anti-Ulcer Drugs

Author

Listed:
  • Crawford, Gregory S.
  • Shum, Matthew

Abstract

Due to differences in the effectiveness and side effects of different drugs, uncertainty is an important component of prescription drug choice. This uncertainty can cause patients and doctors to experiment with different drugs until they find a good match. In this paper, we specify and estimate a dynamic model of pharmaceutical choice under uncertainty in which patients choose a drug in order to minimize the present discounted value of costs associated with treatment in the anti-ulcer drug market. We find strong evidence that this market is split into casual patients for whom uncertainty about drug quality doesn't matter, and serious patients for whom quality differentials between drugs matter, since a high quality drug can substantially lower the expected treatment length (and therefore the associated expected treatment costs). We consider the implications of these results for innovation in this drug market.

Suggested Citation

  • Crawford, Gregory S. & Shum, Matthew, 1998. "Uncertainty and Experimentation in Pharmaceutical Demand: Anti-Ulcer Drugs," Working Papers 98-11, Duke University, Department of Economics.
    • Handle: RePEc:duk:dukeec:98-11
    as

    Download full text from publisher

    File URL: http://www.econ.duke.edu/Papers/Abstracts98/abstract.98.11.html
    File Function: main text
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrew Ching & Masakazu Ishihara, 2010. "The effects of detailing on prescribing decisions under quality uncertainty," Quantitative Marketing and Economics (QME), Springer, vol. 8(2), pages 123-165, June.

    More about this item

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:duk:dukeec:98-11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Department of Economics Webmaster (email available below). General contact details of provider: http://econ.duke.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.