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Direct-to-Consumer Advertising and the Demand for Cholesterol-Reducing Drugs

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Author Info

  • John E. Calfee
  • Clifford Winston
  • Randolph Stempski

Abstract

In August 1997, the Food and Drug Administration (FDA) reinterpreted its advertising regulations to ease limits on the use of broadcast media when advertising prescription drugs directly to consumers. We estimate the effect of direct-to-consumer advertising on demand, using 1995-2000 data from the market for the statin class of cholesterol-reducing drugs. We find no statistically significant effect from any form of advertising and promotion on new statin prescriptions or renewals and no evidence of adverse market effects from advertising or the FDA policy change. We did find evidence, however, that television advertising increased the proportion of cholesterol patients who had been successfully treated, which suggests that advertising reinforces compliance with drug therapy.

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Bibliographic Info

Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

Volume (Year): 45 (2002)
Issue (Month): S2 ()
Pages: 673-690

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Handle: RePEc:ucp:jlawec:doi:10.1086/374704

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Web page: http://www.journals.uchicago.edu/JLE/

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  1. Mannering, Fred & Winston, Clifford, 1995. "Automobile Air Bags in the 1990s: Market Failure or Market Efficiency?," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 265-79, October.
  2. Paul Ellickson & Scott Stern & Manuel Trajtenberg, 2001. "Patient Welfare and Patient Compliance -- An Empirical Framework for Measuring the Benefits from Pharmaceutical Innovation," NBER Chapters, in: Medical Care Output and Productivity, pages 539-564 National Bureau of Economic Research, Inc.
  3. repec:reg:rpubli:141 is not listed on IDEAS
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Cited by:
  1. Daysal, N. Meltem & Orsini, C., 2012. "Spillover Effects of Drug Safety Warnings on Health Behavior," Discussion Paper 2012-025, Tilburg University, Center for Economic Research.
  2. Kurt R. Brekke & Michael Kuhn, 2005. "Direct to Consumer Advertising in Pharmaceutical Markets," CESifo Working Paper Series 1493, CESifo Group Munich.
  3. Guy David & Sara Markowitz & Seth Richards, 2009. "The Effects of Pharmaceutical Marketing and Promotion on Adverse Drug Events and Regulation," NBER Working Papers 14634, National Bureau of Economic Research, Inc.
  4. Matear, Margaret & Dacin, Peter A., 2010. "Marketing and societal welfare: A multiple stakeholder approach," Journal of Business Research, Elsevier, vol. 63(11), pages 1173-1178, November.
  5. Lakdawalla, Darius & Sood, Neeraj & Gu, Qian, 2013. "Pharmaceutical advertising and Medicare Part D," Journal of Health Economics, Elsevier, vol. 32(6), pages 1356-1367.
  6. 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.
  7. Jayawardhana, Jayani, 2013. "Direct-to-consumer advertising and consumer welfare," International Journal of Industrial Organization, Elsevier, vol. 31(2), pages 164-180.
  8. Amrita Bhattacharyya, 2005. "Competition and Advertising in Specialized Markets: A Study of the U.S. Pharmaceutical Industry," Boston College Working Papers in Economics 624, Boston College Department of Economics, revised 10 Nov 2005.
  9. 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.
  10. 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.
  11. John Cawley & John A. Rizzo, 2005. "The Competitive Effects of Drug Withdrawals," NBER Working Papers 11223, National Bureau of Economic Research, Inc.
  12. 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.
  13. Dhaval M. Dave, 2013. "Effects of Pharmaceutical Promotion: A Review and Assessment," NBER Working Papers 18830, National Bureau of Economic Research, Inc.
  14. repec:reg:wpaper:141 is not listed on IDEAS
  15. 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.
  16. 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.

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