Matching Prescription Drugs and Consumers: The Benefits of Direct Advertising

Abstract:     
This was the first paper to discuss the benefits of direct-to-consumer (DTC) advertising. It was published in the New England Journal of Medicine in 1985. The authors are Alison Masson (AKA Alison Keith) and Paul H. Rubin, and the paper was written when the authors were economists at the Federal Trade Commission. The argument was that there were pieces of information available to patients that might not be available to physicians, and DTC advertising could make use of this information. For example, a patient might have stopped taking a drug because of side effects. In that case, he would not be contact with a physician, and so might not obtain information about new drugs lacking that side effect. Similarly, a new treatment for a previously untreatable condition might become available, but the patient would not be in a position to learn of this new treatment if he were not in contact with a physician. It was also argued that DTC advertising could increase competition between various medications, and so lead to lower prices. When the paper was written, the FDA had in place a moratorium on DTC advertising. The paper as later cited by the FDA in its decision to allow such advertising. The arguments can still explain the benefits of most DTC advertising.

Number of Pages in PDF File: 4

Keywords: Pharmaceutical advertising, drug advertising, direct-to-consumer advertising

JEL Classification: 11, D19, D83, I10. I19, K20, L52, L66, M39

Accepted Paper Series