Consumer learning and heterogeneity: Dynamics of demand for prescription drugs after patent expiration

Ching, Andrew T.

doi:10.1016/j.ijindorg.2010.02.004

Cited by 157 publications

(109 citation statements)

References 38 publications

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“…Specifications 2 and 3 suggest that this is primarily caused by the effect NotMD has when parallel imports are prescribed. The estimates for the four variables controlling for the number of months parallel imported products have been available are consistent with the results of Mott and Cline (2002) and Ching (2010), which showed that the time a product of a drug has been available has a positive effect on the probability that it is bought. The only exception is the negative estimate for lnNmpi_subs in specification 4.…”

supporting

confidence: 86%

“…The variables lnNmpi_drug, Nmpi_drug_tr, lnNmpi_subs and Nmpi_subs_tr are included since the results of Mott and Cline (2002) and Ching (2010) indicate that the time a product has been available has a positive effect on the probability that it is bought. Note that since the natural logarithm of 1 is 0, none of these variables changes value the first time a parallel import is bought, which means that there is no risk of within-observation endogeneity.…”

Section: The Market Share For Parallel Importsmentioning

confidence: 99%

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The Effect of Pharmacies’ Right to Negotiate Discounts on the Market Share of Parallel Imported Pharmaceuticals

Granlund

2015

The B.E. Journal of Economic Analysis &Amp; Policy

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This paper analyzes how allowing pharmacies to negotiate discounts with parallel traders and producers affects the market share for parallel imports. Economic theory predicts that discount negotiations will promote products bought directly from the producers because producers have cost advantages, due to which they always underbid the marginal prices of parallel traders. A reform that allowed discount negotiations is found to reduce the market share for parallel imports by about 11 percentage points to reach 31%. The results clearly indicate that pharmacies have an important role in the choice between medically equivalent pharmaceuticals.

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supporting

confidence: 86%

Section: The Market Share For Parallel Importsmentioning

confidence: 99%

The Effect of Pharmacies’ Right to Negotiate Discounts on the Market Share of Parallel Imported Pharmaceuticals

Granlund

2015

The B.E. Journal of Economic Analysis &Amp; Policy

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“…To take the potential endogeneity problem of detailing into account, we extend the estimation method proposed by Ching (2000;2008b), which does not require solving manufacturers' (dynamic or static) optimization problem. This method uses a reduced form approach to model detailing as a function of observed and unobserved state variables that determine demand, and then jointly estimate this pseudo-detailing policy function with the demand side model.…”

mentioning

confidence: 99%

“…Another set of studies takes a structural modeling approach to study how uncertainty about drug qualities affects demand (e.g., Ching 2000;2008a;2008b, Narayanan et al 2005, Mukherji 2002). In particular, Narayanan et al (2005) and Mukherji (2002) use the framework of Erdem and Keane (1996) to investigate the effects of detailing on demand, in which they assume manufacturers use detailing to convey noisy signals about the true quality of their products to physicians.…”

mentioning

confidence: 99%

“…Moreover, similar to Erdem and Keane (1996), he assumes manufacturers know the true mean quality of their products. Ching (2000;2008a;2008b) estimates a structural learning model to examine the equilibrium pricing strategies and diffusion pattern empirically in the U.S. prescription drug market after patent expiration. However, since brand-name firms usually cut their detailing efforts dramatically after patent expiration, he does not model detailing.…”

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The effects of detailing on prescribing decisions under quality uncertainty

2010

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We develop a structural model of detailing and prescribing decisions under an environment where detailing helps physicians obtain the current information sets about drug qualities. Our model assumes that a representative opinion leader is responsible for updating the prior belief about the quality of drugs via patients' experiences, and manufacturers use detailing as a means to build/maintain the measure of physicians who are informed of the current information sets. We estimate our model using data on sales, prices, and detailing minutes at the product level for ACE-inhibitor with diuretic in Canada. We quantify the marginal impact of detailing on current demand at different points in time, and demonstrate how it depends on the measure of well-informed physicians and the information sets. Furthermore, we conduct a policy experiment to examine how a public awareness campaign, which encourages physicians/patients to report their drug experiences, would affect managerial incentives to detail.

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The Welfare Impact of Parallel Imports: A Structural Approach Applied to the German Market for Oral Anti‐diabetics

2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Preliminary version. Please do not cite! Abstract We investigate the welfare impact of parallel imports using a large panel data set containing monthly information on sales, ex-factory prices, and further product characteristics for all 700 antidiabetic drugs sold in Germany between 2004 and 2010. We estimate a two-stage nested logit model of demand and, based on an oligopolistic model of multiproduct rms, we then recover the marginal costs and mark-ups. We nally evaluate the eect of the parallel imports' policy by calculating a counter-factual scenario without parallel trade. According to our estimates, parallel imports reduce the prices for patented and generic drugs by 39% and 0.05%, respectively. This amounts to an increase in the demandside surplus by e11.4 million per year which is relatively small compared to the market size of around e470 million. Manufacturers of original drugs, instead, lose more than half of their variable prots when parallel trade is allowed and only a small fraction of these rents are appropriated by the parallel importers. Terms of use: Documents in EconStor may

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Consumer learning and heterogeneity: Dynamics of demand for prescription drugs after patent expiration

Cited by 157 publications

References 38 publications

The Effect of Pharmacies’ Right to Negotiate Discounts on the Market Share of Parallel Imported Pharmaceuticals

The Effect of Pharmacies’ Right to Negotiate Discounts on the Market Share of Parallel Imported Pharmaceuticals

The effects of detailing on prescribing decisions under quality uncertainty

The Welfare Impact of Parallel Imports: A Structural Approach Applied to the German Market for Oral Anti‐diabetics

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