Direct-to-Physician Promotion: Changing Pharmaceutical Strategies following Medicaid Expansion

This paper explores recent changes in direct-to-physician promotional strategies by pharmaceutical companies. The pervasiveness of this promotion in the health care industry has led to growing concerns about the conflict of interest it may cause, and has triggered a body of research exploring the relationship between pharmaceutical companies and physicians. Existing evidence suggests that these promotional activities increase prescribing volumes and decrease the price-sensitivity of physicians. Given these potentially perverse incentives, understanding more about the nature of the promotional relationship between physicians and pharmaceutical firms is important. Exploiting variation in the introduction and timing of Medicaid Expansion following the Affordable Care Act, I examine changes in pharmaceutical promotional strategies in response to a growth in the consumer market with prescription drug coverage. I find that pharmaceutical firms respond in the frequency of promotional interactions, the nature of promotional activity, and their targeting of particular drugs to physicians. Importantly, I find substantial heterogeneity across physician specialty and patient base. This paper contributes to a growing literature on the nature of promotional interactions between industry and physicians, and highlights the need for improved monitoring and regulation of these interactions.