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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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    Citations

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    Cited by:

    1. Berman, Ron & Heller, Yuval, 2020. "Naive Analytics Equilibrium," MPRA Paper 103824, University Library of Munich, Germany.
    2. Mayank Aggarwal & Anindya S. Chakrabarti & Chirantan Chatterjee, 2023. "Movies, stigma and choice: Evidence from the pharmaceutical industry," Health Economics, John Wiley & Sons, Ltd., vol. 32(5), pages 1019-1039, May.
    3. 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.
    4. Gayle, Philip & Harrison, Teresa, 2023. "Competition and Strategic Responses to Fundraising in Donative Markets," School of Economics Working Paper Series 2024-9, LeBow College of Business, Drexel University, revised 01 Aug 2024.
    5. Carey, Colleen & Lieber, Ethan M.J. & Miller, Sarah, 2021. "Drug firms’ payments and physicians’ prescribing behavior in Medicare Part D," Journal of Public Economics, Elsevier, vol. 197(C).
    6. Suppliet, Moritz, 2020. "Umbrella branding in pharmaceutical markets," Journal of Health Economics, Elsevier, vol. 73(C).
    7. Jingwen Zhang & Yifang Chen & Amandeep Singh, 2022. "Causal Bandits: Online Decision-Making in Endogenous Settings," Papers 2211.08649, arXiv.org, revised Feb 2023.
    8. Bart J. Bronnenberg & Jean-Pierre Dubé & Chad Syverson, 2022. "Marketing Investment and Intangible Brand Capital," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 53-74, Summer.
    9. 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).
    10. Masiero, Giuliano & Steinbach, Sandro, 2020. "Happy Pills? Mental Health Effects of the Dramatic Increase of Antidepressant Use," IZA Discussion Papers 13727, Institute of Labor Economics (IZA).
    11. Lawler, Emily C. & Skira, Meghan M., 2022. "Information shocks and pharmaceutical firms’ marketing efforts: Evidence from the Chantix black box warning removal," Journal of Health Economics, Elsevier, vol. 81(C).
    12. Suppliet, Moritz, 2020. "Umbrella branding in pharmaceutical markets," Journal of Health Economics, Elsevier, vol. 73(C).
    13. Bradley Shapiro & Günter J. Hitsch & Anna Tuchman, 2020. "Generalizable and Robust TV Advertising Effects," NBER Working Papers 27684, National Bureau of Economic Research, Inc.
    14. Fiorentini, Gianluca & Bruni, Matteo Lippi & Mammi, Irene, 2022. "The same old medicine but cheaper: The impact of patent expiry on physicians’ prescribing behaviour," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 37-68.
    15. Andrey Simonov & Szymon K. Sacher & Jean-Pierre H. Dubé & Shirsho Biswas, 2020. "The Persuasive Effect of Fox News: Non-Compliance with Social Distancing During the Covid-19 Pandemic," NBER Working Papers 27237, National Bureau of Economic Research, Inc.
    16. Bradley T. Shapiro & Günter J. Hitsch & Anna E. Tuchman, 2021. "TV Advertising Effectiveness and Profitability: Generalizable Results From 288 Brands," Econometrica, Econometric Society, vol. 89(4), pages 1855-1879, July.
    17. Andrey Simonov & Szymon Sacher & Jean-Pierre Dubé & Shirsho Biswas, 2022. "Frontiers: The Persuasive Effect of Fox News: Noncompliance with Social Distancing During the COVID-19 Pandemic," Marketing Science, INFORMS, vol. 41(2), pages 230-242, March.
    18. Bradley Shapiro & Günter J. Hitsch & Anna Tuchman, 2020. "Generalizable and Robust TV Advertising Effects," Working Papers 2020-111, Becker Friedman Institute for Research In Economics.
    19. Sarah Moshary & Bradley T. Shapiro & Jihong Song, 2021. "How and When to Use the Political Cycle to Identify Advertising Effects," Marketing Science, INFORMS, vol. 40(2), pages 283-304, March.
    20. Christopher Ody & Matt Schmitt, 2019. "Who cares about a label? The effect of pediatric labeling changes on prescription drug utilization," International Journal of Health Economics and Management, Springer, vol. 19(3), pages 419-447, December.
    21. Michael Thomas, 2020. "Spillovers from Mass Advertising: An Identification Strategy," Marketing Science, INFORMS, vol. 39(4), pages 807-826, July.

    More about this item

    Keywords

    Advertising and competition; Analysis of health care markets;

    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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