A 3-stage model for assessing the probable economic effects of direct-to-consumer advertising of pharmaceuticals

The pharmaceutical industry employs a variety of marketing strategies that have previously been directed primarily toward physicians. However, mass media direct-to-consumer (DTC) advertising of prescription drugs has emerged as a ubiquitous promotional strategy.

This article explores the economics of DTC advertising in greater depth than has been done in the past by using a 3-stage economic model to assess the pertinent literature and to show the probable effects of DTC advertising in the United States.

Economics literature on the subject was searched using the Journal of Economic Literature. Health services literature was searched using computer callback devices.

Spending on DTC advertising in the United States increased from $17 million in 1985 to $2.5 billion in 2000. Proponents of DTC advertising claim that it provides valuable product-related information to health care professionals and patients, may contribute to better use of medications, and helps patients take charge of their own health care. Opponents argue that DTC advertising provides misleading messages rather than well-balanced, evidence-based information. The literature is replete with opinions about the effects of prescription drug advertising on pharmaceutical drug prices and physician-prescribing patterns, but few studies have addressed the issues beyond opinion surveys. The economic literature on advertising effects in other markets, however, may provide insight.

DTC advertising indirectly affects the price and the quantity of production of pharmaceuticals via its effect on changes in consumer demand.