Asymmetric Social Interactions in Physician Prescription Behavior: The Role of Opinion Leaders

We quantify the impact of social interactions and peer effects in the context of prescription choices by physicians. Using detailed individual-level prescription data, along with selfreported social network information, we document that physician prescription behavior is significantly influenced by the behavior of research-active specialists, or “opinion leaders” in the physician’s reference group. We leverage a natural experiment in the category, whereby new guidelines released about the therapeutic nature of the focal drug generated conditions where physicians were more likely to be influenced by the behavior of specialist physicians in their network. We find important, statistically significant peer effects that are robust across model specifications. We use the estimates to measure the incremental value to firms of directing targeted sales-force activity to these opinion leaders, and present estimates of the social multiplier of detailing in this category. Key-words: Social Interactions, Peer effects, Social Multiplier, Contagion, Physician Prescription Behavior, Pharmaceutical Industry. * The authors are listed in reverse alphabetical order. The authors would like to thank Ron Burt, Pradeep Chintagunta, Tim Conley, Wes Hartmann, Peter Reiss, Christophe Van den Bulte, Raphael Thomadsen and seminar participants at Berkeley (Haas), Chicago GSB (O&M), Christian Albrechts University, Erasmus, Michigan (Information Systems; College of Pharmacy) and participants at Frank M. Bass (Dallas, 2007), INFORMS Practice of Marketing Science (Wharton, 2007), IOFest (Stanford, 2006), Marketing Science (Pittsburgh, 2006) and SICS (Berkeley, 2006) conferences, and at the 7th Choice Symposium (Wharton, 2007) for feedback; and an anonymous pharmaceutical company for providing the data. Manchanda would like to thank the Kilts Center for Marketing and the True North Communications faculty research fund at the University of Chicago for research assistance. The authors can be contacted via e-mail at [email protected] (Nair), [email protected] (Manchanda) and [email protected] (Bhatia). The usual disclaimer applies.