Measuring the Informative and Persuasive Roles of Detailing on Prescribing Decisions

In the pharmaceutical industry, measuring the importance of informative and persuasive roles of detailing is crucial for both drug manufacturers and policy makers. However, little progress has been made in disentangling between informative and persuasive roles of detailing. In this paper, we provide a new identification strategy to separately identify these two roles. Our key identification assumption is that the informative component of detailing is chemical specific while the persuasive component is brand specific. Our strategy is to focus on markets where some drug manufacturers engage in a co-marketing agreement. Under a co-marketing agreement, two companies market the same chemical under two different brand-names. With our identification assumption, the relative market share of these two brands, together with their individual detailing efforts, would allow us to measure the persuasive component of detailing. The total market share of the chemical, and the sum of the brand-specific detailing efforts for this chemical, would allow us to measure the informative component of detailing. To demonstrate our identification strategy, we estimate two structural models of detailing and prescribing decisions that have been used in the literature, using monthly product level data on sales, prices, and detailing minutes for ACE-inhibitor with diuretic in Canada. This market has three brandname drugs: Vaseretic, Zestoretic, and Prinzide. Zestoretic and Prinzide are made of the same chemicals, but co-marketed by two different companies. We find that the persuasive component mainly influences brand choice, and the informative component is mainly responsible for the growth of the demand for chemicals. Our results suggest that restricting the detailing budget for pharmaceutical products could potentially lower the consumer welfare because it slows down the rate of learning for physicians.