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来源类型Working Paper
规范类型报告
DOI10.3386/w17528
来源IDWorking Paper 17528
The Effect of FDA Advisories on Branded Pharmaceutical Firms' Valuations and Promotion Efforts
Rena M. Conti; Haiden A. Huskamp; Ernst R. Berndt
发表日期2011-10-20
出版年2011
语种英语
摘要The US Food and Drug Administration (FDA) expends considerable efforts in regulating medications approved for use. Yet the impact of medication labeling changes on brand pharmaceutical products, and whether and what firms do to respond to increased information regarding the safety and efficacy of a drug, have not be characterized. We propose a behavioral framework for examining the effects of FDA advisories on branded pharmaceutical firms and their products. We empirically assess the impact of recent FDA advisories on the stock market valuations of a sample of branded pharmaceutical manufacturing firms using event study methods. We examine whether and how branded pharmaceutical manufacturers respond to an advisory by assessing changes in promotion compared to non-affected firms. We find firms targeted by an advisory have average stock price declines of 3% in three days and 11% in five days following the advisory release, and in turn appear to decrease total physician-directed promotion spending, journals ads and detailing visits significantly six months following the advisory release; the provision of free samples is unaffected. We find no changes among therapeutic substitutes unaffected by the advisory. Results of sensitivity analyses suggest firms with market dominant positions experience similar decreases in stock market valuations and physician-directed promotion compared to pooled results. The results are also robust to alternative definitions of the timing of advisory release dates and the severity of advisories' wording. Theory and empirical results suggest the public release of FDA advisories negatively impacts firm's short-term market valuations. The results suggest an additional rationale for previously documented declines in prescribing after FDA advisory releases - significant declines in physician-directed promotion following FDA advisory releases; the combined (and likely correlated) effects of the release of the advisory and declines in physician-directed promotion on prescribing behavior are likely larger than the sum of the independent effects.
主题Microeconomics ; Households and Firms ; Market Structure and Distribution ; Health, Education, and Welfare ; Health ; Other ; Law and Economics ; Industrial Organization ; Market Structure and Firm Performance
URLhttps://www.nber.org/papers/w17528
来源智库National Bureau of Economic Research (United States)
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条目标识符http://119.78.100.153/handle/2XGU8XDN/575202
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Rena M. Conti,Haiden A. Huskamp,Ernst R. Berndt. The Effect of FDA Advisories on Branded Pharmaceutical Firms' Valuations and Promotion Efforts. 2011.
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