A Micro-level Diffusion Model for New Drug Adoption

This paper proposes a micro-level diffusion model to analyze individual physicians' adoption of a newly launched prescription drug. The adoption probability is a function of the following factors: physician-oriented marketing activities, patient requests for the new drug, social contagion among physicians, and physician characteristics. There are several major findings: (1) Consistent with previous literature, targeted detailing and journal advertising have a positive influence on individual physicians' adoption of the new drug. Furthermore, the positive effect of meetings and events sponsored by drug manufacturers is captured by this study, an effect that was omitted by previous studies. (2) Patient requests for the new drug are very influential on physicians' adoption of the new drug. This positive effect of patient requests is new to the extant literature on drug adoption. (3) With a sample representative of the U.S. market, this study demonstrates the existence of contagion effects on physicians' adoption of the new drug. This complements previous studies based on local markets that found contagion effects. (4) Some key physician characteristics, such as prescription volume in the category, are positively related to physicians' intrinsic propensity to adopt the new drug. In a validation exercise, the authors demonstrate that the proposed model performs well in identifying physicians who have a high likelihood of adopting a different new drug early, thereby facilitating targeting of marketing resources.