Pharmaceutical companies market to physicians through individual detailing accompanied by monetary or in-kind transfers. Large compensation payments to a small number of physicians account for most of this promotional spending. Studying US promotional payments and prescriptions for anticoagulant drugs, we investigate how peer influence broadens the payments' reach. Following a compensation payment, prescriptions for the marketed drug increase by both the paid physician and the paid physician's peers. Payments increase prescriptions to both recommended and contraindicated patients. Over three years, marketed anticoagulant prescriptions rose 23 percent due to payments, with peer spillovers contributing a quarter of the increase.
Keywords: I11; L14; O33; health care; networks; peer effects; pharmaceutical advertising; technology diffusion.