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Ask Your Doctor? Direct-to-Consumer Advertising of Pharmaceuticals

Author

Listed:
  • Michael Sinkinson
  • Amanda Starc

Abstract

We measure the impact of direct-to-consumer television advertising (DTCA) by drug manufacturers. Our identification strategy exploits shocks to local advertising markets generated by the political advertising cycle and a regulatory intervention affecting a single product. We find evidence of significant business stealing effects among branded, advertised drugs. In addition, we show positive spillovers from drug advertisements to non-advertised competitors in the same class. We decompose the effect and show it is primarily due to new customers. Finally, we provide evidence that DTCA is cost-effective from a societal standpoint in our setting.

Suggested Citation

  • Michael Sinkinson & Amanda Starc, 2019. "Ask Your Doctor? Direct-to-Consumer Advertising of Pharmaceuticals," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(2), pages 836-881.
    • Handle: RePEc:oup:restud:v:86:y:2019:i:2:p:836-881.
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    File URL: http://hdl.handle.net/10.1093/restud/rdy001
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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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