An empirical study of physicians’ sample-dispensing decisions: Evidence for the roles of experimentation and subsidy

Abstract

The practice of dispensing free samples has been widely adopted by US pharmaceutical companies. Despite physicians’ significant gatekeeper-and decision-maker role in dispensing samples, very few studies in the pharmaceutical marketing literature have empirically examined physicians’ free-sample dispensing decisions or their influence on future prescription decisions. The primary objective of this article is to fill the gap in the literature by examining the key determinants in physician sample-dispensing and quantity decisions at the individual-physician level while controlling for targeted marketing activities and unobserved physician heterogeneity. We conceptualize the dual roles of drug samples, experimentation and subsidy, in physicians’ prescription decision making, empirically test for the existence of these dual roles, and quantify their long-run sales impact using physician panel data from two therapeutic categories. Our analysis yields strong empirical support for the existence of the dual roles in physician sample-dispensing behavior. Finally, we discuss implications of our findings for pharmaceutical managers and policymakers.