Paper #704

Title:

Demand for pharmaceutical drugs: A choice modelling experiment

Author:

Anna Merino

Date:

June 2003

Abstract:

Despite the importance of supplier inducement and brand loyalty in the drug purchasing process, little empirical evidence is to be found with regard to the influence that these factors exert on patients’ decisions. Under the new scenario of easier access to information, patients are becoming more demanding and even go as far as questioning their physicians’ prescription. Furthermore, new regulation also encourages patients to adopt an active role in the decision between brand-name and generic drugs. Using a stated preference model based on a choice survey, I have found evidence of how significant physicians’ prescription and pharmacists’ recommendation become throughout the drug purchase process and, to what extent, brand loyalty influences the final decision. As far as we are aware, this paper is the first to explicitly take consumers’ preferences into account rather than focusing on the behavior of health professionals.

Keywords:

Brand loyalty, demand inducement, drug price elasticity, discrete choice experiment

JEL codes:

I11, D12, C28, C93

Area of Research:

Labour, Public, Development and Health Economics

CRES Series number:

30

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