The Cost Effectiveness of Direct to Consumer Advertising for Prescription Drugs

30 Pages Posted: 12 Feb 2008

See all articles by Paul H. Rubin

Paul H. Rubin

1350 Main St UNIT 1703

Adam Atherly

Emory University - Department of Health Policy and Management

Date Written: February 9, 2008

Abstract

In this paper we use published information to provide analyze the economic value of Direct to Consumer (DTC) advertising. We use information on: the effect of DTC in generating patient visits; the effect of patient visits and mentions of a drug in generating prescriptions; and the effect of advertising on the cost effectiveness for specific advertised drugs. In all cases, we find that DTC advertising does not alter the cost effectiveness of the medications, all of which remain below conventional thresholds for efficiency. This suggests that DTC advertising is a cost effective way of generating patient benefits. Our estimates are conservative. Our methodology leads to underestimates of the benefits of DTC advertising, and overestimates of the costs. We conclude that critics of DTC and calls for moratoria or bans on such advertising are misguided, and that increased, rather than decreased, advertising would be appropriate.

Keywords: Pharmaceutical Advertising, Direct to Consumer Advertising, Pharmaceutical promotion

JEL Classification: I10, I11, I18, K23, L32, L65, M31, M37

Suggested Citation

Rubin, Paul H. and Atherly, Adam, The Cost Effectiveness of Direct to Consumer Advertising for Prescription Drugs (February 9, 2008). Emory Law and Economics Research Paper No. 08-28, Available at SSRN: https://ssrn.com/abstract=1092164 or http://dx.doi.org/10.2139/ssrn.1092164

Paul H. Rubin (Contact Author)

1350 Main St UNIT 1703 ( email )

1350 Main Steet #1703
Sarasota, FL 34236
United States
14049310493 (Phone)

HOME PAGE: http://www.economics.emory.edu/Rubi.htm

Adam Atherly

Emory University - Department of Health Policy and Management ( email )

1518 Clifton Road NE
Rollins School of Public Health
Atlanta, GA 30322
United States

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