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Demand Effects of Recent Changes in Prescription Drug Promotion

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Author Info

  • Rosenthal Meredith B.

    (Harvard School of Public Health)

  • Berndt Ernst R.

    (Massachusetts Institute of Technology and NBER)

  • Donohue Julie M.

    (Harvard Medical School)

  • Epstein Arnold M.

    (Harvard School of Public Health)

  • Frank Richard G.

    (Harvard Medical School and NBER)

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    Abstract

    The release of clarified Food and Drug Administration (FDA) guidelines and independent changes in consumer behavior provide an opportunity to study the effects of direct-to-consumer advertising (DTCA) in the prescription drug market alongside the effects of various physician-oriented promotions. We examine the effects of DTCA and detailing for brands in five therapeutic classes of drugs, using monthly aggregate U.S. data from August 1996 through December 1999. In terms of impact of DTCA on demand, we provide evidence on two issues: (1) do increases in DTCA increase the market size of an entire therapeutic class? and (2) does DTCA increase within-class market share of advertised drugs? Our findings suggest that, for these classes of drugs, DTCA has been effective primarily through increasing the size of the entire class. Overall, we estimate that 13 to 22 percent of the recent growth in prescription drug spending is attributable to the effects of DTCA.

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    File URL: http://www.degruyter.com/view/j/fhep.2003.6.1/fhep.2003.6.1.1044/fhep.2003.6.1.1044.xml?format=INT
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    Bibliographic Info

    Article provided by De Gruyter in its journal Forum for Health Economics & Policy.

    Volume (Year): 6 (2003)
    Issue (Month): 1 (January)
    Pages: 1-28

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    Handle: RePEc:bpj:fhecpo:v:6:y:2003:n:2

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    Web page: http://www.degruyter.com

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    Web: http://www.degruyter.com/view/j/fhep

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    Cited by:
    1. John Cawley & John A. Rizzo, 2005. "The Competitive Effects of Drug Withdrawals," NBER Working Papers 11223, National Bureau of Economic Research, Inc.
    2. 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.
    3. Rosemary J. Avery & Donald S. Kenkel & Dean R. Lillard & Alan D. Mathios, 2006. "Regulating Advertisements: The Case of Smoking Cessation Products," NBER Working Papers 12001, National Bureau of Economic Research, Inc.
    4. Toshiaki Iizuka & Ginger Zhe Jin, 2005. "Drug Advertising and Health Habit," NBER Working Papers 11770, National Bureau of Economic Research, Inc.
    5. Puneet Manchanda & Dick Wittink & Andrew Ching & Paris Cleanthous & Min Ding & Xiaojing Dong & Peter Leeflang & Sanjog Misra & Natalie Mizik & Sridhar Narayanan & Thomas Steenburgh & Jaap Wieringa & M, 2005. "Understanding Firm, Physician and Consumer Choice Behavior in the Pharmaceutical Industry," Marketing Letters, Springer, vol. 16(3), pages 293-308, December.
    6. Peter Leeflang & Jaap Wieringa, 2010. "Modeling the effects of pharmaceutical marketing," Marketing Letters, Springer, vol. 21(2), pages 121-133, June.
    7. Greß, Stefan & Maas, Stephanie & Ulrich, Volker & Schneider, Udo & Koch, Michael, 2007. "Direkte Patienteninformation für verschreibungspflichtige Arzneitmittel: internationale Erfahrungen und Optionen für Deutschland," IBES Diskussionsbeiträge 155, University of Duisburg-Essen, Faculty for Economics and Business Administration.
    8. Rosemary Avery & Donald Kenkel & Dean R. Lillard & Alan Mathios, 2006. "Private Profits and Public Health: Does Advertising Smoking Cessation Products Encourage Smokers to Quit?," NBER Working Papers 11938, National Bureau of Economic Research, Inc.
    9. Patricia M. Danzon & Eric L. Keuffel, 2013. "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.
    10. Frosch, Dominick L. & May, Suepattra G. & Tietbohl, Caroline & Pagán, José A., 2011. "Living in the “land of no”? Consumer perceptions of healthy lifestyle portrayals in direct-to-consumer advertisements of prescription drugs," Social Science & Medicine, Elsevier, vol. 73(7), pages 995-1002.
    11. Avery, Rosemary J. & Eisenberg, Matthew D. & Simon, Kosali I., 2012. "The impact of direct-to-consumer television and magazine advertising on antidepressant use," Journal of Health Economics, Elsevier, vol. 31(5), pages 705-718.

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