Direct-to-Consumer Advertising of Prescription Drugs: A Strategic Analysis

Wilfred Amaldoss () and Chuan He
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Wilfred Amaldoss: Fuqua School of Business, Duke University, Durham, North Carolina 27708

Marketing Science, 2009, vol. 28, issue 3, 472-487

Abstract: Consumers cannot purchase a prescription drug without a prescription from a physician, yet many prescription drugs are promoted to consumers with the help of direct-to-consumer (DTC) advertising. In this paper, we propose and test a competitive model of DTC advertising. We find that the brand specificity of DTC advertising can have an inverted U-shaped relationship with detailing, DTC advertising, and profits. Furthermore, an increase in the cross-price sensitivity between competing prescription drugs is not always detrimental to firm profits. A laboratory test lends qualitative support to some of our model predictions. We also discuss potential implications of DTC advertising for generic drugs and over-the-counter drugs.

Keywords: direct-to-consumer advertising; pharmaceutical marketing; experimental economics; game theory (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:28:y:2009:i:3:p:472-487

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