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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
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    Citations

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    Cited by:

    1. 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.
    2. Toshiaki Iizuka & Ginger Zhe Jin, 2005. "Drug Advertising and Health Habit," NBER Working Papers 11770, National Bureau of Economic Research, Inc.
    3. repec:eee:ijrema:v:25:y:2008:i:4:p:234-246 is not listed on IDEAS
    4. John Cawley & John A. Rizzo, 2005. "The Competitive Effects of Drug Withdrawals," NBER Working Papers 11223, National Bureau of Economic Research, Inc.
    5. repec:eee:ijrema:v:28:y:2011:i:3:p:205-217 is not listed on IDEAS
    6. 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, Institute of Business and Economic Studie (IBES).
    7. Peter Leeflang & Jaap Wieringa, 2010. "Modeling the effects of pharmaceutical marketing," Marketing Letters, Springer, vol. 21(2), pages 121-133, June.
    8. 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.
    9. repec:eee:ijrema:v:25:y:2008:i:4:p:282-293 is not listed on IDEAS
    10. 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.
    11. Ram Bala & Pradeep Bhardwaj, 2010. "Detailing vs. Direct-to-Consumer Advertising in the Prescription Pharmaceutical Industry," Management Science, INFORMS, vol. 56(1), pages 148-160, January.
    12. Abby Alpert & Darius Lakdawalla & Neeraj Sood, 2015. "Prescription Drug Advertising and Drug Utilization: The Role of Medicare Part D," NBER Working Papers 21714, National Bureau of Economic Research, Inc.
    13. 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.
    14. 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.
    15. W. David Bradford & Andrew N. Kleit, 2012. "Direct to Consumer Advertising for Pharmaceuticals: Research Amid the Controversy," Chapters,in: The Elgar Companion to Health Economics, Second Edition, chapter 31 Edward Elgar Publishing.
    16. 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.
    17. repec:eee:jhecon:v:55:y:2017:i:c:p:30-44 is not listed on IDEAS
    18. Patricia M. Danzon & Eric L. Keuffel, 2014. "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.

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