The effects of direct-to-consumer advertising of pharmaceuticals on adherence

Cardon and Showalter

Applied Economics, 2015, vol. 47, issue 50, 5432-5444

Abstract: We evaluate the effect of direct-to-consumer (DTC) advertising on adherence to the standard drug regimen for treating high cholesterol (statins). We use a rich panel data set from an insurance firm that includes all prescription drug purchases and insurance claims from 1997 to 2002.The data include the relevant demographic variables, including income. We match this data with unique data from Nielsen Monitor Plus on monthly DTC advertising expenditures by therapeutic category for all media types.The research strategy identifies individuals who have been diagnosed with specific chronic conditions and tracks whether adherence , as measured by purchases of specific prescription drugs within designated therapeutic classes, can be explained in part by the level and type of DTC advertising to which the individual was potentially exposed. Income has a positive effect on adherence. We find that advertising has a small negative effect on the average level of adherence. We find some suggestive evidence that this is because advertising induces less compliant individuals to start treatment. This result is consistent with research in marketing which finds higher sensitivity to advertising among consumers with less persistent purchasing patterns.

Date: 2015
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DOI: 10.1080/00036846.2015.1049336

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