Regulating Advertisements: The Case of Smoking Cessation Products

44 Pages Posted: 14 Jul 2006 Last revised: 29 Jun 2009

See all articles by Rosemary J. Avery

Rosemary J. Avery

Cornell University - Department of Policy Analysis and Management

Donald Kenkel

Cornell University - Department of Policy Analysis & Management (PAM); National Bureau of Economic Research (NBER)

Dean Lillard

Cornell University - Department of Policy Analysis & Management (PAM)

Alan D. Mathios

Cornell University - Department of Policy Analysis & Management (PAM)

Date Written: February 2006

Abstract

In this paper we investigate how direct-to-consumer (DTC) advertising of pharmaceutical products in affected by regulations of the Food and Drug Administration and by market conditions. We focus on a relatively under-studied segment of the pharmaceutical market -- the market for smoking cessation products. Because of their proven effectiveness, these products could be the key to meeting public health goals to reduce smoking. However, in many ways, smoking cessation products have been more heavily regulated than cigarettes. Our empirical analysis uses data on advertising expenditures and data from an archive of print advertisements. The archive includes all smoking cessation product advertisements that appeared in over 13,000 issues of 28 magazines between January 1985 and May 2002. Our study period begins shortly atfer the first nicotine replacement product was introduced, and covers the evolution of the market as new products are introduced while some of the older products move from prescription to over-the-counter (OTC) status. OTC status eases the disclosure requirements imposed on advertisements of prescription pharmaceuticals, substantially reducing the costs of a print advertisement. Our results suggest that OTC status is associated with an increase in advertising expenditures and the number and pages of magazine advertisements. A current proposal to reduce disclosure requirements on all DTC advertisements of prescription drugs could have similar effects. Our results also suggest that advertising increase with the introduction of new products and with market competition.

Suggested Citation

Avery, Rosemary J. and Kenkel, Donald and Lillard, Dean and Mathios, Alan D., Regulating Advertisements: The Case of Smoking Cessation Products (February 2006). NBER Working Paper No. w12001. Available at SSRN: https://ssrn.com/abstract=881235

Rosemary J. Avery

Cornell University - Department of Policy Analysis and Management ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY
United States
607-255-2578 (Phone)
607-255-4071 (Fax)

Donald Kenkel (Contact Author)

Cornell University - Department of Policy Analysis & Management (PAM) ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY 14853
United States
607-255-2594 (Phone)
607-255-4071 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Dean Lillard

Cornell University - Department of Policy Analysis & Management (PAM) ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY 14853
United States

Alan D. Mathios

Cornell University - Department of Policy Analysis & Management (PAM) ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY 14853
United States
607-255-2589 (Phone)
607-255-0799 (Fax)

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