NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Michael Sinkinson, Amanda Starc

NBER Working Paper No. 21045
Issued in March 2015
NBER Program(s):Health Care, Industrial Organization

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 idiosyncrasies of the political advertising cycle as well as a regulatory intervention affecting a single product. We find that a 10% increase in the number of a firm's ads leads to a 0.76% increase in revenue, while the same increase in rival advertising leads to a 0.55% decrease in firm revenue. Results also indicate that a 10% increase in category advertising produces a 0.2% revenue increase for non-advertised drugs. Both the business-stealing and spillover effects would not be detected through OLS. Decomposition using micro data confirms that the effect is due mostly to new customers as opposed to switching among current customers. Simulations show that an outright ban on DTCA would have modest effects on the sales of advertised drugs as well as on non-advertised drugs.

download in pdf format
   (5662 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21045

Published: Michael Sinkinson, Amanda Starc; Ask Your Doctor? Direct-to-Consumer Advertising of Pharmaceuticals, The Review of Economic Studies, , rdy001, https://doi.org/10.1093/restud/rdy001

Users who downloaded this paper also downloaded* these:
Bar and Lillard w19794 Direct to Consumer Advertising of Pharmaceutical Drugs: Information and Persuasion
Dave and Saffer w15969 The Impact of Direct-to-Consumer Advertising on Pharmaceutical Prices and Demand
Alpert, Lakdawalla, and Sood w21714 Prescription Drug Advertising and Drug Utilization: The Role of Medicare Part D
Cheremukhin, Golosov, Guriev, and Tsyvinski w21397 The Economy of People’s Republic of China from 1953
Dave w18830 Effects of Pharmaceutical Promotion: A Review and Assessment
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us