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

John Calfee, Clifford Winston and Randolph Stempski

Journal of Law and Economics, 2002, vol. 45, issue S2, 673-690

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.

Date: 2002
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