Demand Effects of Recent Changes in Prescription Drug Promotion

Publication Date: June 2003

Publisher: Henry J. Kaiser Family Foundation

Author(s):

Research Area: Health

Type: Report

Coverage: United States

Abstract:

The rapid increase in DTC advertising for prescription drugs has focused attention on its role in drug spending and prescribing. A new study by researchers at Harvard University and the Massachusetts Institute of Technology looks at the effect of direct-to-consumer (DTC) advertising on spending for prescription drugs. The study found that, on average, a 10% increase in DTC advertising of drugs within a therapeutic drug class resulted in a 1% increase in sales of the drugs in that class.

Applying this result to the 25 largest drug classes in 2000, the study found that every $1 the pharmaceutical industry spent on DTC advertising in that year yielded an additional $4.20 in drug sales. DTC advertising was responsible for 12% of the increase in prescription drugs sales, or an additional $2.6 billion, in 2000. DTC advertising did not appear to affect the relative market share of individual drugs within their drug class.