Promoting Wellness or Waste? Evidence from Antidepressant Advertising

Abstract

It is taken as given by many policy makers that Direct-to-Consumer Advertising of prescription drugs drives inappropriate patients to treatment. Alternatively, advertising may provide useful information that causes appropriate patients to seek treatment. I study this dynamic in the context of antidepressants. Leveraging variation driven by the borders of television markets, I find that a 10% increase in antidepressant advertising leads to a 0.3% ($32 million) increase in new prescriptions followed by reductions in workplace absenteeism worth about $770 million. I find no effect of advertising on prices, generic penetration, drug switches, adverse effects, non-adherence rates or therapist visits.

Keywords: Advertising, DTCA, Labor Supply, Health, Selection

JEL Classification: M31, M37, M38, H23, I11, I12, I18, L51, J22, J24, M54