The Impact of Direct-to-Consumer Advertising of Cholesterol Reducing Drugs on Diagnosis and Treatment of Cholesterol

Abstract

This paper examines the impact of Direct-to-Consumer Advertising (DTCA) of cholesterol-reducing drugs (statins) on consumers' market and non-market behaviors. Our research builds up on the existing literature by utilizing a unique set of data sets that combine extensive survey data on statins use with an archive of advertisements that allow us to measure how many advertisements each individual has been exposed to. Combining these data allows us to measure each respondent's exposure to drug advertising which can then be linked with consumer behavior. Moreover, we are also able to control for the majority of factors that firms use in targeting their advertisements so we can account for the fact that firms are likely to target specific groups that may be more inclined to use statins. Because we can control for this targeting, we are better able to assess the causal impact of advertising on statins use. Finally, because we have individual variation in exposure to advertising we are able to examine how demographic groups are differentially exposed to this advertising and whether they react to it with different intensities. Thus, we can examine whether advertising tends to increase or decrease health disparities.

Our results show that there is a positive and significant effect of DTCA exposure on getting diagnosed, purchasing statins and exercising regularly, but the effect of DTCA exposure largely goes away with the exception of exercise when we control more intensely for firms' targeting. Some of our results are opposite to previous findings that DTCA increases the likelihood of visiting physician's office or decreases exercising. But in most studies on the impact of DTCA, it is difficult, if not impossible with the data that is utilized, to adequately address the targeting issue. Adequately accounting for targeting is one of the most significant challenges to research on the impact of advertising.

Our results have important implications for the regulation of advertising. First, there are significant public health benefits from private sector advertising as this advertising accomplishes the same goals as public health messages designed to encourage consumers to change their life style first in order to treat high blood cholesterol. Second, advertising does not change the propensity for physicians to prescribe statin drugs for those that have been diagnosed with high cholesterol, suggesting that advertising does not corrupt the physician/patient relationship. The implications for advertising law are significant and are discussed in the final section of the paper.

Keywords: Direct-to-Consumer Advertising, Economics of Advertising, Cholesterol Reducing Drug

JEL Classification: I11, I12, I18, M37, L65