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The Shape of Demand: What Does It Tell Us about Direct-to-Consumer Marketing of Antidepressants?

Author

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  • Meyerhoefer Chad D.

    (Agency for Healthcare Research and Quality)

  • Zuvekas Samuel H

    (Agency for Healthcare Research and Quality)

Abstract

Much of the debate surrounding Direct-to-Consumer Advertising (DTCA) of pharmaceuticals centers on whether DTCA conveys useful information to consumers or indiscriminately increases requests for the advertised medication. By identifying how DTCA changes the shape of the demand curve for antidepressants, we seek to infer the promotional objectives of manufacturers. Using data from the 1996-2003 Medical Expenditure Panel Survey (MEPS), we find that advertising shifts the demand curve for antidepressants outward and rotates it counter-clockwise. DTCA increases the probability that an individual will initiate use of antidepressants, particularly when out-of-pocket medication costs are low, but does not necessarily increase utilization levels among those already taking antidepressants. This is consistent with a promotional campaign that seeks to alert consumers to the product's existence, but conveys no real information that would allow them to learn their true match with the product.

Suggested Citation

  • Meyerhoefer Chad D. & Zuvekas Samuel H, 2008. "The Shape of Demand: What Does It Tell Us about Direct-to-Consumer Marketing of Antidepressants?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(2), pages 1-34, January.
    • Handle: RePEc:bpj:bejeap:v:8:y:2008:i:2:n:4
    DOI: 10.2202/1935-1682.1805
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    Citations

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    Cited by:

    1. 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.
    2. Driver, Ciaran, 2015. "Advertising’s Elusive Economic Rationale: is there a case for limiting tax relief?," MPRA Paper 68790, University Library of Munich, Germany.
    3. Keith J. Zullig & Amanda L. Divin, 2022. "Quantifying Healthy Days Lost to the Non-Medical Use of Prescription Drugs (NMUPD) among a Sample of College Students," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 17(2), pages 655-669, April.
    4. Dhaval M. Dave, 2013. "Effects of Pharmaceutical Promotion: A Review and Assessment," NBER Working Papers 18830, National Bureau of Economic Research, Inc.
    5. Chad D. Meyerhoefer & Samuel H. Zuvekas & Richard Manski, 2014. "The Demand For Preventive And Restorative Dental Services," Health Economics, John Wiley & Sons, Ltd., vol. 23(1), pages 14-32, January.
    6. Marisa E. Domino, 2012. "Does managed care affect the diffusion of psychotropic medications?," Health Economics, John Wiley & Sons, Ltd., vol. 21(4), pages 428-443, April.
    7. Guy David & Sara Markowitz, 2011. "Side Effects of Competition: the Role of Advertising and Promotion in Pharmaceutical Markets," NBER Working Papers 17162, National Bureau of Economic Research, Inc.
    8. Katolik, Aleksandra & Oswald, Andrew J., 2017. "Antidepressants for Economists and Business-School Researchers: An Introduction and Review," CAGE Online Working Paper Series 338, Competitive Advantage in the Global Economy (CAGE).
    9. 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.
    10. Katolik, Aleksandra & Oswald, Andrew J., 2017. "Antidepressants for Economists and Business-School Researchers: An Introduction and Review," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 71(4), pages 448-463.
    11. Stefan Stremersch & Vardit Landsman & Sriram Venkataraman, 2013. "The Relationship Between DTCA, Drug Requests, and Prescriptions: Uncovering Variation in Specialty and Space," Marketing Science, INFORMS, vol. 32(1), pages 89-110, June.
    12. Thomas Andrews & Cynthia Benzing, 2010. "Simplifying the Price Elasticity of Demand," Journal for Economic Educators, Middle Tennessee State University, Business and Economic Research Center, vol. 10(1), pages 1-13, Summer.
    13. Chad D. Meyerhoefer & Samuel H. Zuvekas, 2010. "New estimates of the demand for physical and mental health treatment," Health Economics, John Wiley & Sons, Ltd., vol. 19(3), pages 297-315, March.
    14. Deiana, C. & Giua, L. & Nisticò, R., 2020. "Opium Price Shocks and Prescription Opioids in the US," Health, Econometrics and Data Group (HEDG) Working Papers 20/23, HEDG, c/o Department of Economics, University of York.
    15. Jie Chen & John Rizzo, 2012. "Pricing dynamics and product quality: the case of antidepressant drugs," Empirical Economics, Springer, vol. 42(1), pages 279-300, February.

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