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Direct To Consumer Advertising And Prescription Choice

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  • TOSHIAKI IIZUKA
  • GINGER Z. JIN

Abstract

This paper examines the effect of direct‐to‐consumer advertising (DTCA) of prescription drugs on doctors' choice of drug brands. Using antihistamines as an example, we show that DTCA has little effect on the choice of brand despite the massive DTCA expenditure incurred in this class. In contrast, promotional activities directed toward physicians have larger and longer lasting effects. These results, together with the market‐expanding results shown in Iizuka and Jin (2005), suggest that DTCA is effective in increasing the aggregate demand per therapeutic class but does not affect doctor choice of prescription within a class. Therefore, DTCA may be viewed as a public good for all drugs in the same class.

Suggested Citation

  • Toshiaki Iizuka & Ginger Z. Jin, 2007. "Direct To Consumer Advertising And Prescription Choice," Journal of Industrial Economics, Wiley Blackwell, vol. 55(4), pages 771-771, December.
    • Handle: RePEc:bla:jindec:v:55:y:2007:i:4:p:771-771
    DOI: 10.1111/j.1467-6451.2007.00329.x
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    Cited by:

    1. Suppliet, Moritz, 2020. "Umbrella branding in pharmaceutical markets," Journal of Health Economics, Elsevier, vol. 73(C).
    2. Chesnes, Matthew & Jin, Ginger Zhe, 2019. "Direct-to-consumer advertising and online search," Information Economics and Policy, Elsevier, vol. 46(C), pages 1-22.
    3. Hosken, Daniel & Wendling, Brett, 2013. "Informing the uninformed: How drug advertising affects check-up visits," International Journal of Industrial Organization, Elsevier, vol. 31(2), pages 181-194.
    4. Amrita Bhattacharyya, 2005. "Advertising in Specialized Markets: Example from the US Pharmaceutical Industry," Boston College Working Papers in Economics 610, Boston College Department of Economics, revised 10 Nov 2005.
    5. Dhaval Dave & Henry Saffer, 2012. "Impact of Direct‐to‐Consumer Advertising on Pharmaceutical Prices and Demand," Southern Economic Journal, John Wiley & Sons, vol. 79(1), pages 97-126, July.
    6. Herr, A. & Suppliet, M., 2011. "Co-Payment Exemptions and Reference Prices: an Empirical Study of Pharmaceutical Prices in Germany," Health, Econometrics and Data Group (HEDG) Working Papers 11/18, HEDG, c/o Department of Economics, University of York.
    7. Matthew Chesnes & Ginger Zhe Jin, 2016. "Direct-to-Consumer Advertising and Online Search," NBER Working Papers 22582, National Bureau of Economic Research, Inc.
    8. de Frutos, Maria-Angeles & Ornaghi, Carmine & Siotis, Georges, 2013. "Competition in the pharmaceutical industry: How do quality differences shape advertising strategies?," Journal of Health Economics, Elsevier, vol. 32(1), pages 268-285.
    9. Toshiaki Iizuka & Ginger Zhe Jin, 2005. "Drug Advertising and Health Habit," NBER Working Papers 11770, National Bureau of Economic Research, Inc.
    10. Shanjun Li & Ramanan Laxminarayan, 2015. "Are Physicians' Prescribing Decisions Sensitive to Drug Prices? Evidence from a Free‐antibiotics Program," Health Economics, John Wiley & Sons, Ltd., vol. 24(2), pages 158-174, February.
    11. Suppliet, Moritz & Herr, Annika, 2016. "Cost-Sharing and Drug Pricing Strategies : Introducing Tiered Co-Payments in Reference Price Markets," Discussion Paper 2016-040, Tilburg University, Center for Economic Research.
    12. Bradley T. Shapiro, 2016. "Estimating the cost of strategic entry delay in pharmaceuticals: The case of Ambien CR," Quantitative Marketing and Economics (QME), Springer, vol. 14(3), pages 201-231, September.
    13. Dhaval M. Dave, 2013. "Effects of Pharmaceutical Promotion: A Review and Assessment," NBER Working Papers 18830, National Bureau of Economic Research, Inc.
    14. Sood, Ashish & Kappe, Eelco & Stremersch, Stefan, 2014. "The commercial contribution of clinical studies for pharmaceutical drugs," International Journal of Research in Marketing, Elsevier, vol. 31(1), pages 65-77.
    15. John Cawley & John A. Rizzo, 2005. "The Competitive Effects of Drug Withdrawals," NBER Working Papers 11223, National Bureau of Economic Research, Inc.
    16. Jayawardhana, Jayani, 2013. "Direct-to-consumer advertising and consumer welfare," International Journal of Industrial Organization, Elsevier, vol. 31(2), pages 164-180.
    17. Svetlana Beilfuss & Sebastian Linde, 2021. "Pharmaceutical opioid marketing and physician prescribing behavior," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 3159-3185, December.
    18. Anusua Datta & Dhaval Dave, 2017. "Effects of Physician‐directed Pharmaceutical Promotion on Prescription Behaviors: Longitudinal Evidence," Health Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 450-468, April.
    19. Rosemary Avery & Donald Kenkel & Dean Lillard & Alan Mathios, 2007. "Regulating advertisements: the case of smoking cessation products," Journal of Regulatory Economics, Springer, vol. 31(2), pages 185-208, April.
    20. David B. Ridley, 2015. "Payments, Promotion, And The Purple Pill," Health Economics, John Wiley & Sons, Ltd., vol. 24(1), pages 86-103, January.
    21. Matthew McGranaghan & Jura Liaukonyte & Kenneth C. Wilbur, 2022. "How Viewer Tuning, Presence, and Attention Respond to Ad Content and Predict Brand Search Lift," Marketing Science, INFORMS, vol. 41(5), pages 873-895, September.
    22. Toshiaki Iizuka, 2004. "What Explains the Use of Direct‐to‐Consumer Advertising of Prescription Drugs?," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 349-379, September.
    23. Toshiaki Iizuka & Ginger Zhe Jin, 2005. "The Effect of Prescription Drug Advertising on Doctor Visits," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 701-727, September.
    24. Eisenberg, Matthew D. & Avery, Rosemary J. & Cantor, Jonathan H., 2017. "Vitamin panacea: Is advertising fueling demand for products with uncertain scientific benefit?," Journal of Health Economics, Elsevier, vol. 55(C), pages 30-44.
    25. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484, National Bureau of Economic Research, Inc.

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