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No Free Lunch? Welfare Analysis of Firms Selling Through Expert Intermediaries / Matthew Grennan, Kyle Myers, Ashley Swanson, Aaron Chatterji.
- Format:
- Book
- Author/Creator:
- Grennan, Matthew.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w24864.
- NBER working paper series no. w24864
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Physician-Industry Interactions
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- We study how firms target and influence expert intermediaries. In our empirical context, pharmaceutical manufacturers provide payments to physicians during promotional interactions. We develop an identification strategy based on plausibly exogenous variation in payments driven by differential exposure to spillovers from academic medical centers' conflict-of-interest policies. Using a detailed case study of an important class of cardiovascular drugs, we estimate heterogeneous effects of payments on prescribing, with firms targeting highly responsive physicians. Our model of supply and demand allows us to quantify how oligopoly prices reduce drug prescribing, and how payments move prescribing closer to the optimal level, but at great financial cost to patients and payers. In our estimated model, consumers are worse off with payments, unless there is substantial underprescribing due to behavioral or other frictions. In a final exercise, we calibrate such frictions using clinical data. We estimate that, in this case study, payments benefit consumers.
- Notes:
- Print version record
- July 2018.
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