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Promoting Wellness or Waste? Evidence from Antidepressant Advertising

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  • Bradley T. Shapiro

Abstract

It is taken as given by many policy makers that Direct-to-Consumer Advertising of prescription drugs drives inappropriate patients to treatment. Alternatively, advertising may provide useful information that causes appropriate patients to seek treatment. I study this dynamic in the context of antidepressants. Leveraging variation driven by the borders of television markets, I find that a 10 percent increase in anti-depressant advertising leads to a 0.3 percent ($32 million) increase in new prescriptions followed by reductions in workplace absenteeism worth about $770 million. I find no effect of advertising on prices, generic penetration, drug switches, adverse effects, non-adherence rates, or therapist visits.

Suggested Citation

  • Bradley T. Shapiro, 2022. "Promoting Wellness or Waste? Evidence from Antidepressant Advertising," American Economic Journal: Microeconomics, American Economic Association, vol. 14(2), pages 439-477, May.
    • Handle: RePEc:aea:aejmic:v:14:y:2022:i:2:p:439-77
    DOI: 10.1257/mic.20190277
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    Citations

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    Cited by:

    1. Alpert, Abby & Lakdawalla, Darius & Sood, Neeraj, 2023. "Prescription drug advertising and drug utilization: The role of Medicare Part D," Journal of Public Economics, Elsevier, vol. 221(C).
    2. Junichiro Ishida & Tsuyoshi Takahara, 2024. "Should product‐specific advertisement be regulated in pharmaceutical markets?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(2), February.
    3. Matthew McGranaghan & Jura Liaukonyte & Kenneth C. Wilbur, 2022. "How Viewer Tuning, Presence, and Attention Respond to Ad Content and Predict Brand Search Lift," Marketing Science, INFORMS, vol. 41(5), pages 873-895, September.
    4. Rahi Abouk & Keshar M. Ghimire & Johanna Catherine Maclean & David Powell, 2023. "Pain Management and Work Capacity: Evidence From Workers’ Compensation and Marijuana Legalization," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(3), pages 737-770, June.
    5. Yin, Nina, 2023. "Pharmaceuticals, incremental innovation and market exclusivity," International Journal of Industrial Organization, Elsevier, vol. 87(C).
    6. Hjalmarsson, Linn & Schmid, Christian P.R. & Schreiner, Nicolas, 2024. "A Prescription for Knowledge: Patient Information and Generic Substitution," Working papers 2024/05, Faculty of Business and Economics - University of Basel.
    7. Kelli Marquardt & Conor Ryan, 2023. "The Role of Information in Pharmaceutical Advertising: Theory and Evidence," Working Paper Series WP 2023-40, Federal Reserve Bank of Chicago.

    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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