The Effect of Information Disclosure on Industry Payments to Physicians

• Published in: Journal of marketing research Vol. 58; no. 1; pp. 115 - 140
• Main Authors: Guo, Tong, Sriram, S., Manchanda, Puneet
• Format: Journal Article
• Language: English
• Published: Los Angeles, CA SAGE Publications 01.02.2021; SAGE PUBLICATIONS, INC
• Subjects: Disclosure; Incentives; Payments; Pharmaceutical industry; Physicians; quasiexperiment; causal forest; pharmaceutical marketing; causal inference; heterogeneous treatment effect; machine learning; information disclosure; public policy
• ISSN: 0022-2437; 1547-7193
• DOI: 10.1177/0022243720972106

In 2019, U.S. pharmaceutical companies paid $3.6 billion to physicians in the form of gifts to promote their drugs. To curb inappropriate financial relationships between health care providers and firms, several state laws require firms to publicly declare the payments they make to physicians. In 2013, this disclosure law was rolled out to all 50 states. The authors investigate the causal impact of this increased transparency on subsequent payments between firms and physicians. While firms and physicians were informed of the disclosure regulation at data collection, complete transparency did not occur until the data were published online. The authors estimate the heterogeneous treatment effects of the online data disclosure exploiting the phased rollout of the disclosure laws across states, facilitated by recent advances in machine learning methods. Using a 29-month national panel covering $100 million in payments between 16 antidiabetic brands and 50,000 physicians, the authors find that the monthly payments changed insignificantly, on average, due to disclosure. However, the average null effect masks some unintended consequences of disclosure, wherein payments may have increased for more expensive drugs and among physicians who prescribed more heavily. The authors further explore potential mechanisms that can parsimoniously describe the data pattern.