Detailing versus Direct-To-Consumer Advertising in the Prescription Pharmaceutical Industry
نویسندگان
چکیده
The pharmaceutical industry is a very promotions intensive industry. This industry has always used sales representatives to target physicians, who are a key link in sales and market share for prescription pharmaceuticals. Since August of 1997 when the Food and Drug Administration eased the restrictions on Direct-to-consumer advertising (DTCA), there has been a dramatic increase in the use of DTCA by pharmaceutical firms to target end customers (patients). DTCA seems to have two different effects on pharmaceutical markets. The first is to inform patients about the availability of drugs for some ailments, thus expanding the market (informative). The second is to persuade patients to talk about specific brands when they meet physicians, with the objective of influencing market share (persuasive). We consider both effects of DTCA in the presence of a detailing program in a competitive environment. We build a game-theoretic model where firms decide on what form of DTCA to adopt (informative or persuasive) and then compete in the marketplace by choosing detailing and DTCA levels. We answer three questions: when do optimal detailing levels for a firm increase with increase in DTCA? Under what conditions would competing firms voluntarily decide to pursue informative DTCA? Finally, how should the DTCA strategy for a firm vary depending on whether it is stronger or weaker in its degree of influence in the doctor’s office? (
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