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Consumer Welfare Better Off With Increased Rx Advertising

According to the results of a University of Georgia study published in the September 13, 2012 issue of the International Journal of Industrial Organization, increased DTC advertising for prescription drugs in recent years is linked with increased levels of consumer welfare when compared with situations when this marketing wasn’t used.

Author Jayani Jayawardhana, and assistant professor in the university’s college of public health, focused the multi-year study on the advertising efforts for cholesterol-reducing prescription meds. Jayawardhana concluded that increased efforts in this area—thanks to the federal deregulation of prescription drug marketing in 1997 that allowed for DTC marketing of prescription drugs without the need for detailed summaries of the drug—help bring under-diagnosed patients to physicians’ offices. She argues that her finding add to existing data that suggest DTC advertising allows for more informed and curious consumers.

“Let’s say you see a commercial for Lipitor, and you suspect that you have high cholesterol, so you come and ask for that drug from the physician,” Jayawardhana said. “For whatever reason, the doctor may assume that isn’t the best drug for you, and you get prescribed Zocor instead. The point isn’t that you didn’t get the drug you saw on the commercial but rather that you came to the doctor and got treatment for your condition, which leads to welfare improvement.”

Jayawardhana’s study didn’t stop with a look only at DTC marketing. She suggests that physician-directed advertising is also paying off. “When you see an advertisement for something like Coke, the intent is to give you an incentive to go buy the product,” she noted. “But with the prescription drug market, the consumer is not the final decision maker. You have to go through a gatekeeper in the physician.” And targeted advertising toward those gatekeepers, according to Jayawardhana, informs and persuades them in the selection of a drug.

She noted that critics of the 1997 federal deregulation argue that the resultant 200% increase in pharmaceutical advertising spending could lead to numerous harmful outcomes, including the request and receipt of inappropriate medications or medication dosages by patients. Jayawardhana suggests that because physicians do act as gatekeepers for these drugs and consumers have limited access to them, these harmful outcomes may be scarce.

HealthBridge wants to know:

Do you feel the benefits of branded, DTC pharmaceutical advertising outweigh the risks? Why or why not?

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