Direct-to-Consumer Advertising and Online Search

BUREAU OF ECONOMICS FEDERAL TRADE COMMISSION, Working paper no. 331

33 Pages Posted: 11 Aug 2016  

Matthew Chesnes

Federal Trade Commission; Johns Hopkins University

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2016

Abstract

Beginning in 1997, the Food and Drug Administration (FDA) allowed television advertisements to make major statements about a prescription drug, while referring to detailed drug information on the internet (FDA 1997; 2015). The hope was that consumers would seek additional information online to fully understand the risks and benefits of taking the medication. To better understand the effects of the policy, we analyze direct-to-consumer advertising (DTCA) and search engine click-through data on a set of drugs over a three-year period.

Regression analysis shows that advertising on a prescription drug serves to increase the frequency of online search and subsequent clicks for that drug, as well as search for other drugs in the same class. We find the relationship between DTCA and search is stronger for younger drugs, for those drugs that treat acute conditions, those drugs that are less likely to be covered by insurance, and those whose searcher population tends to be older. These findings suggest that DTCA motivates consumers to search online for drug information, but the magnitude of the effect is heterogeneous and potentially associated with clicks on websites that are more promotional in nature.

Keywords: Direct-to-consumer Advertising, Prescription Drugs, Internet Search

JEL Classification: D83, I18, K32, L81

Suggested Citation

Chesnes, Matthew and Jin, Ginger Zhe, Direct-to-Consumer Advertising and Online Search (August 2016). BUREAU OF ECONOMICS FEDERAL TRADE COMMISSION, Working paper no. 331. Available at SSRN: https://ssrn.com/abstract=2819140 or http://dx.doi.org/10.2139/ssrn.2819140

Matthew William Chesnes (Contact Author)

Federal Trade Commission ( email )

600 Pennsylvania Avenue, NW
Washington, DC 20580
United States
2023263083 (Phone)

HOME PAGE: http://www.chesnes.com

Johns Hopkins University ( email )

Baltimore, MD 20036-1984
United States

Ginger Zhe Jin

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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