Behavioral economics studies how people make decisions. Psychology, anthropology and economics factor into the multi-dimensional approach to decision making. People don't just buy a car or house; they carefully assess and evaluate alternatives to balance risk and reward.
Pharmaceutical marketing research could benefit from understanding behavioral economics. Prescribing is a largely rational process. More than 20 drugs have been pulled in the past decade, so physicians now consider many factors before prescribing, slowing drug adoption. Physicians need to know outright how a product fits their practice and its potential side effects, as well as ease of “selling” it, if managed care requires time-wasting paperwork and how these factors compare to what they've been prescribing.
Understanding decision making is as important as predicting product preferences. Choice models overstate adoption relative to the subsequent reality. We adjust for this, but insight into the decision process would help explain this exaggeration.
Most physicians use a few simple heuristics to make prescribing decisions. But the industry bases brand ratings on as many product attributes as possible, not recognizing that physicians don't analyze attributes, but quickly decide what is “good enough.” The emotional and rational are totally intertwined.
So we must adapt our thinking and methodologies to better assess product potential, studying tradeoffs within the parameters of physician decision-making. We should appreciate momentum and learn how to best bundle benefits to change physician behavior.
The theories of behavioral economics provide improved insight into new product potential—an insight our industry needs.
Harris Kaplan is CEO of Healogix, LLC.