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Demand Effects of Recent Changes in Prescription Drug Promotion

Author

Listed:
  • 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)

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.

Suggested Citation

  • 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.
    • Handle: RePEc:bpj:fhecpo:v:6:y:2003:n:2
    DOI: 10.2202/1558-9544.1044
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