IDEAS home Printed from https://ideas.repec.org/a/ucp/jlawec/doi10.1086-374704.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/374704
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/374704
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/374704?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mannering, Fred & Winston, Clifford, 1995. "Automobile Air Bags in the 1990s: Market Failure or Market Efficiency?," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 265-279, October.
    2. Benham, Lee, 1972. "The Effect of Advertising on the Price of Eyeglasses," Journal of Law and Economics, University of Chicago Press, vol. 15(2), pages 337-352, October.
    3. Kwoka, John E, Jr, 1984. "Advertising and the Price and Quality of Optometric Services," American Economic Review, American Economic Association, vol. 74(1), pages 211-216, March.
    4. Pauline M. Ippolito & Alan D. Mathios, 1990. "Information, Advertising and Health Choices: A Study of the Cereal Market," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 459-480, Autumn.
    5. John E. Calfee, 1997. "Fear of Persuasion: A New Perspective on Advertising Regulation," Books, American Enterprise Institute, number 53387, September.
    6. Paul Ellickson & Scott Stern & Manuel Trajtenberg, 2001. "Patient Welfare and Patient Compliance -- An Empirical Framework for Measuring the Benefits from Pharmaceutical Innovation," NBER Chapters, in: Medical Care Output and Productivity, pages 539-564, National Bureau of Economic Research, Inc.
    7. Pierre Azoulay, 2002. "Do Pharmaceutical Sales Respond to Scientific Evidence?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(4), pages 551-594, December.
    8. repec:reg:rpubli:141 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hattori, Keisuke & Higashida, Keisaku, 2014. "Misleading advertising and minimum quality standards," Information Economics and Policy, Elsevier, vol. 28(C), pages 1-14.
    2. Martin Gaynor, 1994. "Issues in the Industrial Organization of the Market for Physician Services," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 211-255, March.
    3. Häring, Julia, 2005. "The Virtual Location of E-Tailers: Evidence from a B2C E-Commerce Market," ZEW Discussion Papers 05-52, ZEW - Leibniz Centre for European Economic Research.
    4. Massimo Motta, 2013. "Advertising bans," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 4(1), pages 61-81, March.
    5. Hosken, Daniel & Wendling, Brett, 2013. "Informing the uninformed: How drug advertising affects check-up visits," International Journal of Industrial Organization, Elsevier, vol. 31(2), pages 181-194.
    6. Hamilton, Stephen F. & Richards, Timothy J. & Stiegert, Kyle W., 2009. "How Does Advertising Affect Market Performance? The Case of Generic Advertising," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49187, Agricultural and Applied Economics Association.
    7. Collins, J. Michael & Simon, Kosali I. & Tennyson, Sharon, 2013. "Drug withdrawals and the utilization of therapeutic substitutes: The case of Vioxx," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 148-168.
    8. Jeffrey R. Brown & Austan Goolsbee, 2002. "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 481-507, June.
    9. David Paton, 1998. "Who A dvertises Prices? A Firm Level Study Based on Survey Data," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(1), pages 57-75.
    10. Jeffrey R. Brown & Austan Goolsbee, 2000. "Does the Internet Make Markets More Competitive?," NBER Working Papers 7996, National Bureau of Economic Research, Inc.
    11. Martin Gaynor & Solomon Polachek, 1990. "Measuring Ignorance in the Market: A New Method with an Application to Physician Services," NBER Working Papers 3430, National Bureau of Economic Research, Inc.
    12. Joel Waldfogel & Jeffrey Milyo, 1999. "The Effect of Price Advertising on Prices: Evidence in the Wake of 44 Liquormart," American Economic Review, American Economic Association, vol. 89(5), pages 1081-1096, December.
    13. Zeynep K. Hansen & Marc T. Law, 2008. "The Political Economy of Truth-in-Advertising Regulation during the Progressive Era," Journal of Law and Economics, University of Chicago Press, vol. 51(2), pages 251-269, May.
    14. Duncan Simester & Yu (Jeffrey) Hu & Erik Brynjolfsson & Eric T. Anderson, 2009. "Dynamics Of Retail Advertising: Evidence From A Field Experiment," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 482-499, July.
    15. David Genesove & Avi Simhon, 2015. "Seasonality and the Effect of Advertising on Price," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 199-222, March.
    16. Rauch, Ferdinand, 2013. "Advertising expenditure and consumer prices," International Journal of Industrial Organization, Elsevier, vol. 31(4), pages 331-341.
    17. C. Robert Clark, 2007. "Advertising Restrictions and Competition in the Children’s Breakfast Cereal Industry," Journal of Law and Economics, University of Chicago Press, vol. 50(4), pages 757-780.
    18. Clifford Winston, 2008. "The Efficacy of Information Policy: A Review of Archon Fung, Mary Graham, and David Weil's Full Disclosure: The Perils and Promise of Transparency," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 704-717, September.
    19. Victor J. Tremblay & Kumiko Okuyama, 2001. "Advertising Restrictions, Competition, And Alcohol Consumption," Contemporary Economic Policy, Western Economic Association International, vol. 19(3), pages 313-321, July.
    20. Caswell, Julie A. & Perloff, Jeffrey M., 1993. "Implications of New Industrial Organization and Demand Models for Marketing Research," Food and Agricultural Marketing Issues for the 21st Century - FAMC 1993 Conference 265924, Food and Agricultural Marketing Consortium (FAMC).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:doi:10.1086/374704. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.