The Effects Of Direct-To-Consumer Advertising In The Prescription Drug Markets

Topics:
Brand Management
Tags:
Advertisement,
DTC
Source:
Social Science Electronic Publishing

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Overview: The year of 1997 witnessed an important change in direct-to-consumer (DTC) advertising of prescription drugs. For the first time, the Food and Drug Administration (FDA) permitted brand-specific DTC ads on TV without a "brief summary" of comprehensive risk information. This led to a three-fold growth of DTC advertising expenditure in four years, followed by an intensive debate about the effects of DTC advertising on patient and doctor behaviors. This paper empirically examines the effects of DTC ads on ethical drugs by combining 1996-1999 DTC advertising data with the annual National Ambulatory Medical Care Survey (NAMCS). This article explores that DTC advertising leads to a large increase in the number of outpatient drug visits, a moderate increase in the time spent with doctors, but no effect on doctors' specific choice among prescription drugs within a therapeutic class. Consistent with the proponents' claim, this finding suggests that DTC ads encourage patient visits but do not challenge doctors' authority in the specific choice of prescription drugs. The results also suggest that the effect of DTC advertising is primarily market expanding rather than business stealing, and therefore DTC advertising is a public good for all drugs in the same therapeutic class.

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Format: PDF | Size: 376KB | Date: Dec 2002 | Pages: 41

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