Ask Your Doctor? Direct-to-Consumer Advertising of Pharmaceuticals

Michael Sinkinson and Amanda Starc

The Review of Economic Studies, 2019, vol. 86, issue 2, 836-881

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.

Keywords: Advertising and competition; Analysis of health care markets (search for similar items in EconPapers)
JEL-codes: I11 L10 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:86:y:2019:i:2:p:836-881.

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