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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Friebel, Guido / Requate, Till / Tsui, Kevin / Wichardt, Philipp / Zulehner, Christine

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Prescription Drug Advertising and Patient Compliance: A Physician Agency Approach

Olivier Armantier1 / Soiliou Namoro2

1Université de Montréal,

2University of Pittsburgh,

Citation Information: Advances in Economic Analysis & Policy. Volume 6, Issue 1, ISSN (Online) 1538-0637, DOI: 10.2202/1538-0637.1545, September 2006

Publication History

Published Online:
2006-09-27

Abstract

This paper proposes an analysis of both doctors and patients' behavior in an agency model that accounts for the interplay between two highly debated health issues: drug advertising toward doctors and/or patients, and the serious problem of patients' noncompliance with their doctors' prescriptions. Due to the lack of individual data, we propose a structural approach inspired from the industrial organization literature. The model is estimated semiparametrically with product level data on the U.S. market for anti-glaucoma drugs. The results suggest that doctors' prescriptions are directly influenced by the probability of noncompliance, as well as advertising aimed at both doctors and patients. Advertisement toward patients (respectively, doctors) appears to have contributed to (respectively, slowed down) the reduction of the estimated average noncompliance rate.

Keywords: direct-to-consumer advertising; prescription compliance; structural econometrics; semiparametric estimation

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