Economics professor investigates conflicts of interest in medicine

In May 2017, Matthew Chao, assistant professor of economics, published (along with 10 others) an investigation into the association between pharmaceutical policies in teaching hospitals and physician prescribing.

This study, titled “Association Between Academic Medical Center Pharmaceutical Detailing Policies and Physician Prescribing,” gives insight into the relationships between doctors and the pharmaceutical industry. It was published in the Journal of the American Medical Association.

“We were looking at how doctors are or are not potentially influenced by the marketing activities that pharmaceutical companies use in their interactions with doctors,” Chao said.

The authors concluded that there are associations between pharmaceutical representatives’ interactions with physicians and physician prescribing. By looking at data of prescriptions made by academic medical centers that had policies against interactions with certain companies from 2006 to 2012, Chao and the other authors discovered that, in the medical centers with restricted interactions between physicians and a specific pharmaceutical company, marketed drugs prescribed by that company dropped by as much as 1 percent.

The relationship between drug companies and medical professionals has been one of increasing interest within the medical field. Pharmaceutical representatives, or “pharma reps,” are hired to frequently “detail” health offices, hospitals and medical centers. This marketing strategy entails distributing new information on drugs or clinical trials, visiting offices and giving free meals, pens, notebooks and handouts. These handouts present information on new drugs or clinical trials that the company has been working on to medical professionals.

The pharma rep business was at its peak in the early 2000s with around 100,000 hired reps, compared to a total of 800,000 to 900,000 doctors and medical professionals in the United States. According to the New York Times, in 2008, pharmaceutical companies spent $16 billion giving drug samples to doctors and $6 billion in detailing.

Though the industry for detailing and drug sampling has been on the decline, this has not quelled concerns that, through such interactions, drug companies influence what drugs physicians choose to prescribe for their patients.

For this reason, Chao became fascinated with this study as a new member of a research team at Harvard Business School in 2008, which he attended shortly after graduating from Dartmouth with degrees in psychology and economics in 2006. The team was conducting research investigating conflicts of interest between the pharmaceutical industry and physicians.

Chao said that, though the pharmaceutical industry’s impact in physician prescribing may seem to be a purely medical topic at hand, in actuality, it can also be studied through the lenses of economics and psychology.

“All of these are standard economics questions. These are standard decision-making contexts that we, as economists, study,” Chao said. “This [project] is a great application of a lot of the things we’re trying to study about decision-making and the impact that these different types of incentives can make on how we make decisions.”

The study was deliberately submitted into a medical journal instead of an economics journal by the authors so that doctors would have a greater awareness of the potential impacts that their interactions with pharma reps may have on physician prescribing.

In many ways, Chao’s research regarding the pharmaceutical industry speaks to his fascination with both economics and psychology. While both of these areas of study have different methods for research and use of data, they both attempt to answer the same questions – and Chao’s recent work exemplifies this intersection between economics and philosophy.

“We’re trying to understand how people make decisions, and how those decisions aggregate into market behavior and market outcomes,” Chao said. “In this case, doctors are influenced by all of these incentives and, in aggregate, how does that impact the total drugs prescribed? How does that shift what’s actually happening in the market? Psychologists will focus deeply on that individual question … but we are really thinking about the same things in terms of finding out what makes people tick.”

A lifelong appeal to psychology and economics shaped much of Chao’s academic career, including his time at the College, where he has been since 2015. For the time being, he will continue to both teach as an associate professor at the College and conduct research. When he’s not teaching one of his three economics courses, Chao plans to continue conducting research on the impact that health legislation in Massachusetts has had on interactions between pharmaceutical companies and physicians.

“Teaching goes hand-in-hand with trying to become an expert in some aspect of social science,” Chao said. “If you want to do research, you have to teach.”