Drug Diffusion Through Peer Networks: The Influence of Industry Payments

Abstract

Pharmaceutical companies' marketing efforts primarily target physicians, often through individual detailing that entails monetary or in-kind transfers. We study how peer influence broadens these payments' reach beyond the directly paid physicians. Combining Medicare prescriptions and Open Payments data for anticoagulant drugs, we document that pharmaceutical payments target highly connected physicians. We exploit within-physician variation in payment exposure over time to estimate the payments' influence. Unlike the paid doctor, peer physicians are not directly selected by the pharmaceutical company on the basis of their expertise or enthusiasm for the target drug. Yet, following a large payment, prescriptions for the target drug increase both by the paid physician and the paid physician's peers. These peer effects influence doctors who share patients with the paid physician, even when the two doctors are not affiliated with the same group practice. We find no evidence that payments reduce prescriptions among high-risk patients. Over the period 2014--2016, physician payments associated with anticoagulant marketing increased the drugs' prescription volume by 23 percent, with peer spillovers contributing a quarter of the increase.

Drug Firms' Payments and Physicians' Prescribing Behavior in Medicare Part D

“…Grennan et al (2018) use variation in hospitals' policies that ban pharmaceutical sales representatives from the premises and find that a meal increases cardiologists' prescribing of the promoted statin by roughly 70 percent. Agha and Zeltzer (2019) use a fixed-effect approach similar to ours and find that small payments increase prescribing of blood thinners by approximately 10 percent. 3 We contribute to this literature in three ways.…”

“…Some recent analyses in economics and marketing have used longitudinal data to explore the effect of payments on prescribing, but are limited to a small number of drugs (e.g. Mizik and Jacobson, 2004;Datta and Dave, 2017;Grennan et al, 2018;Agha and Zeltzer, 2019). Grennan et al (2018) use variation in hospitals' policies that ban pharmaceutical sales representatives from the premises and find that a meal increases cardiologists' prescribing of the promoted statin by roughly 70 percent.…”

Personal Payments from Pharmaceutical Companies to Authors of Oncology Clinical Practice Guidelines

“…Our analysis focused on "general payments," the term used by Open Payments to describe personal payments to physicians, because this is the form of payment that has been consistently identified as influencing physician prescribing behavior. 7,[9][10][11] . General payments include both direct cash transfers and in-kind gifts.…”

“…[3][4][5][6][7][8][9] The temporal association between payments and prescribing strongly suggest that this association is causal. 10,11 Physicians who have financial relationships with industry are more likely to recommend a company's drugs for formulary inclusion. 12 Industry relationships among oncology guideline authors are associated with the treatment recommendations made by those guidelines.…”

Physicians payment in the United States between 2014 and 2018: An analysis of the CMS Open Payments database

“…Specifically, financial incentives and conflicts-of-interest (COI) have been implicated as important factors that can influence physician decision-making, whether in private practice, large hospital systems, or academic medicine settings [ 2 , 3 ]. Specifically, transfers of value to physicians from pharmaceutical companies, biotechnology companies, device companies, and other medical manufacturers can play a role in influencing prescribing patterns, rationale selection, and patient outcomes leading to increased scrutiny, calls for regulation and transparency, and enforcement actions (e.g., including through prosecutions under the Anti-Kickback Statute and False Claims Act) [ 4 , 5 ].…”