When the ZRXDTCjtand ADVERSEjtvariables are omitted, we obtain the following estimated equation: ln(QRXDAYjt/QRXDAYCIM,t) = 0.709 - 0.196*ln(PRXDAYjt/PRXDAYCIM,t) 0.113) (0.065) - 0.024*ln(ZOTCDTCjt/ZOTCDTCCIM,t) + 0.796*ln(ZRXMDjt/ZRXMDCIM,t) (0.038) (0.087) - 0.803*RXORDERj- 0.0008*(RXOFFPATjt- RXOFFPATCIM,t) + 0.315*GERDjt(0.023) (0.0002) (0.053) + 0.109*ZRXPPIMDt- 0.020*ZRXPPIDTCt, R2= 0.896. (0.006) (0.006) The estimated value of the marketing monthly depreciation rate ä based on the grid search procedure is 2.5%, with a 95% confidence interval of 0.9% to 4.2%. Thus marketing efforts depreciate more rapidly in the OTC H2market than in the Rx H2segment. In terms of the other estimated parameters, the price-elasticity estimate of -0.196 is surprisingly small in absolute value; recall that the IMS Health Rx price measures do not include rebates, and thus measurement error could be biasing this parameter estimate toward zero. In the Rx H2market, there appear to be fewer OTC-Rx marketing spillovers than in the OTC market. Specifically, the relative quantities of Rx H2s are not significantly related to relative direct-to-consumer marketing stocks of the same-brand OTC H2products (elasticity estimate of -0.024, p = 0.528), but relative Rx quantities are strongly and positively related to the relative physician-oriented Rx marketing stocks (0.796, t-statistic of 9.176). As in Berndt, Bui, Lucking-Reiley and Urban, order of entry effects are negative and very strong (-0.802, p < 0.001). Differences in months following Rx patent expiration significantly affect relative quantities, with longer times off-patent reducing that molecule's sales. While significant (p < 0.001), this patent expiration effect is small in magnitude. Those brands having a GERD
RX-OTC SWITCHES AND AFTERLIFE FOLLOWING PATENT PROTECTION- PAGE 34 -indication approval advantage relative to Tagamet/cimetidine have considerably larger sales, ceteris paribus; when exponentiated, the GERD coefficient implies about a 37% increase as one moves from a parity to an advantageous GERD position. The final results concern non-neutral spillovers among the Rx H2s resulting from aggressive marketing by manufacturers of the PPIs. The positive and significant estimate on ZRXPPIMD (0.109, p , 0.001) implies that physician-directed marketing of the Rx PPIs positively affected relative sales of the three "premium" H2s -- Zantac, Pepcid and Axid, all relative to Tagamet/cimetidine. Hence, if a physician prescribed an H2instead of the PPI, the H2 chosen was more likely to be a “premium” H2. The negative estimate on ZRXPPIDTC indicates that DTC marketing of the Rx PPIs reduced sales of the premium H2s. This latter result is consistent with physicians' responding to DTC marketing of the PPIs by substituting away from the premium Rx H2s and instead prescribing the PPIs. D. THE SECOND TIER: TOTAL OTC VS. TOTAL RX H2S In the second tier of the demand framework we specify factors affecting the quantity shares of H2s between the total Rx and total OTC components. We define QRXDAYt(now without the subscript j) and PRXDAYtas the quantity and price of days of Rx H2therapy, and QOTCDAYtand POTCDAYtas the corresponding OTC variables.
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- Fall '15
- Marketing, Over-the-counter drug, GlaxoSmithKline, Ranitidine, cimetidine