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Direct-to-Consumer Advertising and the Demand for Cholesterol-Reducing Drugs

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  • John E. Calfee
  • Clifford Winston
  • Randolph Stempski

Abstract

In August 1997, the Food and Drug Administration (FDA) reinterpreted its advertising regulations to ease limits on the use of broadcast media when advertising prescription drugs directly to consumers. We estimate the effect of direct-to-consumer advertising on demand, using 1995-2000 data from the market for the statin class of cholesterol-reducing drugs. We find no statistically significant effect from any form of advertising and promotion on new statin prescriptions or renewals and no evidence of adverse market effects from advertising or the FDA policy change. We did find evidence, however, that television advertising increased the proportion of cholesterol patients who had been successfully treated, which suggests that advertising reinforces compliance with drug therapy.

Suggested Citation

  • John E. Calfee & Clifford Winston & Randolph Stempski, 2002. "Direct-to-Consumer Advertising and the Demand for Cholesterol-Reducing Drugs," Journal of Law and Economics, University of Chicago Press, vol. 45(S2), pages 673-690.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/374704
    DOI: 10.1086/374704
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