Promoting Wellness or Waste? Evidence from Antidepressant Advertising
32 Pages Posted: 6 Mar 2018 Last revised: 5 May 2018
Date Written: May 3, 2018
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial and has ambiguous potential welfare effects. In this paper, I estimate costs and benefits of DTCA to patients and payers in the market for antidepressant drugs to assess whether advertising marginal prescriptions are desirable on average. In particular, using individual health insurance claims and human resources data, I estimate the effects of DTCA on outcomes relevant to patient and payer costs: new prescriptions, prices and adherence. Additionally I estimate the effect of DTCA on labor supply, the economic outcome most associated with depression. First, category expansive effects of DTCA found in past literature are replicated, with DTCA particularly causing new prescriptions of antidepressants. Meanwhile, concurrent advertising drives slightly lower refill rates. Additionally, I find evidence of no advertising effect on the prices or co-pays of the drugs prescribed, the generic penetration rate or the rate of adverse effects. Finally, advertising significantly decreases missed days of work, with the effect concentrated on workers who tend to have more absences. Back-of-the-envelope calculations suggest that the wage benefits of the advertising marginal work days are more than an order of magnitude larger than the total cost of the advertising marginal prescriptions.
Keywords: Advertising, DTCA, Labor Supply, Health, Selection
JEL Classification: M31, M37, M38, H23, I11, I12, I18, L51, J22, J24, M54
Suggested Citation: Suggested Citation