The Importance of Doctors' and Patients' Preferences in the Prescription Decision

This paper studies the contribution of doctor and patient "habit" to persistence in market shares in prescription drug markets. My unique panel dataset allows me to estimate the probability of switching brands as a function of patient and doctor attributes, with an emphasis on past prescribing behaviour so as to capture the degree of persistence. I find significant evidence of time-dependence in prescription choices for both doctors and patients, which seems to imply that in molecular submarkets in which brands are not allowed to compete on the basis of price, doctor and patient "habit" at the micro-level can translate into sticky and persistent market shares at the aggregate level. Copyright 2000 by Blackwell Publishing Ltd