Academic journal article Economic Inquiry

The Effect of Direct to Consumer Television Advertising on the Timing of Treatment

Academic journal article Economic Inquiry

The Effect of Direct to Consumer Television Advertising on the Timing of Treatment

Article excerpt

I. INTRODUCTION

In August 1997, the Food and Drug Administration (FDA) relaxed the rules governing television advertising of prescription pharmaceutical products. Before that time, broadcast ads were permitted only to mention either the name of a drug or a disease against which a drug was effective but not both. After August 1997, pharmaceuticals were allowed to mention both the disease and the drug brand name (as long a a brief list of side effects was mentioned and 1-800 number or World Wide Web site was provided with more detailed information). Spending for direct to consumer advertising (DTCA for prescription drugs went from $985 million in 1996 to approximately $4.2 billion for 2005 (Donohue, Cevasco, and Rosenthal 2007). This has led to a great deal of debate in the medical profession and among health care insurer and managed care organizations and an ongoing review of advertising rules by the FDA However, very little is actually known about the effects of DTCA for the efficient allocation o prescription drugs.

We will examine how DTCA affects physician prescribing patterns and courses of care for patients suffering from a representative chronic condition, osteoarthritis (OA). This condition is of special significance, as one of the major products in this area, Merck's "Vioxx" cyclooxygenase-2 (COX-2) inhibitor was forced to withdraw from the market in October 2004 due to side effects on patients with heart conditions. The side effects of Vioxx have caused considerable criticism of Merck's advertising strategy for Vioxx (see, e.g., editorials from the New England Journal of Medicine; Mukherjee, Nissen, and Topol 2001; Topol 2004).

The primary goal of this paper was to determine what effect local and national television advertising on behalf of the two main COX-2 inhibitors had on the treatment decisions that patients made in collaboration with their physicians. In particular, we will examine the impact of DTCA on the time patients wait after diagnosis with OA and before initiating treatment with a COX-2 inhibitor. The paper will proceed by first reviewing the literature on DTCA in Section II. Section III will present a theoretical model of optimal delay to treatment. Section IV will present details of the data and empirical model we implement. Empirical results are presented in Section V, and Section VI concludes with a discussion about future research.

II. BACKGROUND AND LITERATURE

A. Advertising for COX-2 Inhibitors

Historically, pharmaceutical advertising was done largely through "detailing"--promotion directly from the manufacturer to the physician, either through visits by representatives or contacts by pharmacists or through advertisements in professional journals. Since the mid-1980s, however, drug companies in the United States have increasingly turned their marketing strategies directly toward the consumer. This advertising largely takes place through television media and in newspapers. This change in advertising approach has its share of both critics and advocates.

The pharmaceutical industry in the United States is large--accounting for more than $132 billion in retail sales in 2000 alone (NIHCM 2001). In 2000, Celebrex (celecoxib), the leading COX-2 inhibitor, had sales of approximately $2.6 billion ("Pharmacia has setback for parecoxib" 2001)--while Vioxx (rofecoxib) sold more than $1.2 billion in the first half of 2000 (Knight Ridder News 2001). In support of Vioxx, Merck spent almost $161 million in DTCA in 2000 (Schumann 2001)--which was the most spent on DTCA for any prescription pharmaceutical, making it the 39th most advertised brand of any kind in 2000 ("Top brands in network primetime-2000" 2001). Over the same time periods, Pharmacia and Pfizer jointly spent $78 million in DTCA supporting Celebrex.

We have chosen to examine the role of DTCA in the context of the market for COX-2 inhibitors. During the period spanned by our data (1999-2002), the two available COX-2 inhibitors were Vioxx and Celebrex. …

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