Regulating Advertisements: The Case of Smoking Cessation Products
AbstractIn this paper we investigate how direct-to-consumer (DTC) advertising of pharmaceutical products in affected by regulations of the Food and Drug Administration and by market conditions. We focus on a relatively under-studied segment of the pharmaceutical market -- the market for smoking cessation products. Because of their proven effectiveness, these products could be the key to meeting public health goals to reduce smoking. However, in many ways, smoking cessation products have been more heavily regulated than cigarettes. Our empirical analysis uses data on advertising expenditures and data from an archive of print advertisements. The archive includes all smoking cessation product advertisements that appeared in over 13,000 issues of 28 magazines between January 1985 and May 2002. Our study period begins shortly atfer the first nicotine replacement product was introduced, and covers the evolution of the market as new products are introduced while some of the older products move from prescription to over-the-counter (OTC) status. OTC status eases the disclosure requirements imposed on advertisements of prescription pharmaceuticals, substantially reducing the costs of a print advertisement. Our results suggest that OTC status is associated with an increase in advertising expenditures and the number and pages of magazine advertisements. A current proposal to reduce disclosure requirements on all DTC advertisements of prescription drugs could have similar effects. Our results also suggest that advertising increase with the introduction of new products and with market competition.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12001.
Date of creation: Feb 2006
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- 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.
- I1 - Health, Education, and Welfare - - Health
- L5 - Industrial Organization - - Regulation and Industrial Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-02-26 (All new papers)
- NEP-COM-2006-02-26 (Industrial Competition)
- NEP-CSE-2006-02-26 (Economics of Strategic Management)
- NEP-HEA-2006-02-26 (Health Economics)
- NEP-MKT-2006-02-26 (Marketing)
- NEP-REG-2006-02-26 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pauline M. Ippolito & Alan D. Mathios, 1990. "Information, Advertising and Health Choices: A Study of the Cereal Market," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 459-480, Autumn.
- Chaloupka, Frank J. & Warner, Kenneth E., 2000.
"The economics of smoking,"
Handbook of Health Economics,
in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 29, pages 1539-1627
- Berndt, Ernst R, et al, 1995. "Information, Marketing, and Pricing in the U.S. Antiulcer Drug Market," American Economic Review, American Economic Association, vol. 85(2), pages 100-105, May.
- Andrew M. Jones, 2012.
The New Palgrave Dictionary of Economics,
- Jeremy Bulow & Paul Klemperer, 1999.
"The Tobacco Deal,"
- Bulow, Jeremy I & Klemperer, Paul, 1999. "The Tobacco Deal," CEPR Discussion Papers 2125, C.E.P.R. Discussion Papers.
- Bulow, J. & Klemperer, P., 1999. "The Tobacco Deal," Economics Papers 1999-w11, Economics Group, Nuffield College, University of Oxford.
- Paul Klemperer & Jeremy Bulow, 1998. "The Tobacco Deal," Economics Series Working Papers 1999-W11, University of Oxford, Department of Economics.
- Rosenthal Meredith B. & Berndt Ernst R. & Donohue Julie M. & Epstein Arnold M. & Frank Richard G., 2003. "Demand Effects of Recent Changes in Prescription Drug Promotion," Forum for Health Economics & Policy, De Gruyter, vol. 6(1), pages 1-28, January.
- Alvin Silk & Lisa Klein & Ernst Berndt, 2002. "Intermedia Substitutability and Market Demand by National Advertisers," Review of Industrial Organization, Springer, vol. 20(4), pages 323-348, June.
- Becker, Gary S & Murphy, Kevin M, 1988.
"A Theory of Rational Addiction,"
Journal of Political Economy,
University of Chicago Press, vol. 96(4), pages 675-700, August.
- Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
- Schneider, Lynne & Klein, Benjamin & Murphy, Kevin M, 1981.
"Governmental Regulation of Cigarette Health Information,"
Journal of Law and Economics,
University of Chicago Press, vol. 24(3), pages 575-612, December.
- Benjamin Klein & Kevin M. Murphy & Lynne Schneider, 1981. "Governmental REgualtion of Cigarette Health Information," UCLA Economics Working Papers 200, UCLA Department of Economics.
- Lewit, Eugene M & Coate, Douglas & Grossman, Michael, 1981.
"The Effects of Government Regulation on Teenage Smoking,"
Journal of Law and Economics,
University of Chicago Press, vol. 24(3), pages 545-69, December.
- Eugene M. Lewit & Douglas Coate & Michael Grossman, 1982. "The Effects of Government Regulation on Teenage Smoking," NBER Working Papers 0655, National Bureau of Economic Research, Inc.
- Theodore E. Keeler & Teh-wei Hu & Alison Keith & Richard Manning & Martin D. Marciniak & Michael Ong & Hai-Yen Sung, 2002. "The benefits of switching smoking cessation drugs to over-the-counter status," Health Economics, John Wiley & Sons, Ltd., vol. 11(5), pages 389-402.
- Mathios, Alan D, 2000. "The Impact of Mandatory Disclosure Laws on Product Choices: An Analysis of the Salad Dressing Market," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 651-77, October.
- Bhattacharya, Jayanta & Vogt, William B, 2003. "A Simple Model of Pharmaceutical Price Dynamics," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 599-626, October.
- Mark J. Roberts & Larry Samuelson, 1988.
"An Empirical Analysis of Dynamic, Nonprice Competition in an Oligopolistic Industry,"
RAND Journal of Economics,
The RAND Corporation, vol. 19(2), pages 200-220, Summer.
- Roberts, M.J. & Samuelson, L., 1988. "An Empirical Analysis Of Dynamic, Non-Price Competition In An Oligopolistic Industry," Papers 3-88-14, Pennsylvania State - Department of Economics.
- Calfee, John E. & Stempski, Randolph & Winston, Clifford, 2003. "Direct-to-Consumer Advertising and the Demand for Cholesterol-Reducing Drugs," Working paper 425, Regulation2point0.
- repec:reg:rpubli:141 is not listed on IDEAS
- Saffer, Henry & Chaloupka, Frank, 2000. "The effect of tobacco advertising bans on tobacco consumption," Journal of Health Economics, Elsevier, vol. 19(6), pages 1117-1137, November.
- Craig A. Gallet & John A. List, 2003. "Cigarette demand: a meta-analysis of elasticities," Health Economics, John Wiley & Sons, Ltd., vol. 12(10), pages 821-835.
- Scott Morton, Fiona M., 2000. "Barriers to entry, brand advertising, and generic entry in the US pharmaceutical industry," International Journal of Industrial Organization, Elsevier, vol. 18(7), pages 1085-1104, October.
- Ippolito, Pauline M & Mathios, Alan D, 1995. "Information and Advertising: The Case of Fat Consumption in the United States," American Economic Review, American Economic Association, vol. 85(2), pages 91-95, May.
- Sloan, Frank A. & Smith, V. Kerry & Taylor, Donald Jr., 2002. "Information, addiction, and 'bad choices': lessons from a century of cigarettes," Economics Letters, Elsevier, vol. 77(2), pages 147-155, October.
- Chang-Yang Lee, 2002. "Advertising, Its Determinants, and Market Structure," Review of Industrial Organization, Springer, vol. 21(1), pages 89-101, August.
- Jonathan Gruber, 2001. "Tobacco at the Crossroads: The Past and Future of Smoking Regulation in the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 193-212, Spring.
- Meredith B. Rosenthal & Ernst R. Berndt & Julie M. Donohue & Arnold M. Epstein & Richard G. Frank, 2003. "Demand Effects of Recent Changes in Prescription Drug Promotion," NBER Chapters, in: Frontiers in Health Policy Research, Volume 6, pages 1-26 National Bureau of Economic Research, Inc.
- Mullahy, John, 1997. "Heterogeneity, Excess Zeros, and the Structure of Count Data Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 337-50, May-June.
- John A. Tauras & Frank J. Chaloupka, 2001. "The Demand for Nicotine Replacement Therapies," NBER Working Papers 8332, National Bureau of Economic Research, Inc.
- Patricia M. Danzon & Mark V. Pauly, 2002. "Health Insurance and the Growth in Pharmaceutical Expenditures," Journal of Law and Economics, University of Chicago Press, vol. 45(S2), pages 587-613.
- Keith, Alison, 1995. "Regulating Information about Aspirin and the Prevention of Heart Attack," American Economic Review, American Economic Association, vol. 85(2), pages 96-99, May.
- Schmalensee, Richard, 1983. "Advertising and Entry Deterrence: An Exploratory Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 636-53, August.
- Toshiaki Iizuka & Ginger Zhe Jin, 2005. "Drug Advertising and Health Habit," NBER Working Papers 11770, National Bureau of Economic Research, Inc.
- 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.
If references are entirely missing, you can add them using this form.