Conflict of Interest Policies and the Diffusion of Stimulant, Antidepressant, and Antipsychotic Medications

The pharmaceutical industry spends roughly 15 billion dollars annually on detailing – providing gifts, samples, free pens, trips, honoraria and other inducements – to physicians in order to encourage them to prescribe their drugs. In response, a movement to regulate pharmaceutical marketing emerged. In this article, we use a dataset that captures 189 million psychotropic prescriptions written in the United States to examine how gift regulation, peer influence, and drug characteristics shaped the diffusion of four newly marketed medications. We show that regulation of pharmaceutical detailing has a substantial impact on physician prescribing behavior. In areas that prohibit gifts from pharmaceutical sales representatives to doctors, uptake of new costly medications is significantly lower than in areas that allow unrestricted pharmaceutical marketing. Depending on the characteristics of the medication, we observed reductions in prescribing ranging from 39% to 83%. Where regulations govern detailing, physicians prescribe innovative drugs that work and shy away from prescribing new drugs that offer no new benefits. In states that ban gift-giving, peer influence substitutes for pharmaceutical detailing when an innovative drug comes to market and provides a less biased channel for physicians to learn about new medications. 1 Pharmaceutical companies invest heavily in marketing. Between 1990 and 2008, pharmaceutical expenditures on marketing increased nearly six-fold from $3 billion dollars to more than $20.5 billion dollars (Congressional Budget Office 2009). A practice commonly known as detailing, in which drug company representatives make sales calls to physicians and provide them with information, free samples, literature, and gifts, accounted for the majority of promotional expenses. Collectively, pharmaceutical companies spent $15.7 billion dollars on detailing in 2011 or roughly $19,000 for every physician in the The problem with detailing is that it creates situations in which a physician's professional judgment may be at odds with his or her personal self-interest. Amidst growing concern about potential conflicts of interests generated by detailing, a host of states, medical schools, and interest groups have begun to advocate for policies to regulate interactions between physicians and pharmaceutical representatives. Efforts to transform the pharmaceutical industry have taken a variety of forms ranging from self-regulation to laws prohibiting physicians from receiving gifts from pharmaceutical companies. The American Medical Association, the American College of Physicians, as well as the Pharmaceutical Research and Manufacturers Association have all established quasi-voluntary codes of conduct to self-regulate physician-industry collaborations. Academic medical centers have implemented policies to govern interactions between students and …