Drug Diffusion through Peer Networks: The Influence of Industry Payments

Peer effects may amplify the decisions of early technology adopters as information spreads through local networks. One impact of pharmaceutical company payments to physicians may be to leverage peer influence within existing provider networks. Using matched physician data from Medicare Part D and Open Payments Data, we investigate the influence of pharmaceutical payments on the prescription of new anticoagulants. First, we show that pharmaceutical payments target physicians who share patients with many different providers, and thus may have greater scope for peer influence. Within a difference in differences framework, we find a physician’s own prescription of new anticoagulant drugs increases following a pharmaceutical payment, relative to the physician-specific baseline prescribing rate for that drug. Peers of targeted physicians also increase their prescribing after the targeted physician is paid. Both effects scale with the size of the payment, with larger payments showing greater influence on both own prescribing and peer prescribing.