Abstract

Much of the debate surrounding Direct-to-Consumer Advertising (DTCA) of pharmaceuticals centers on whether DTCA conveys useful information to consumers or indiscriminately increases requests for the advertised medication. By identifying how DTCA changes the shape of the demand curve for antidepressants, we seek to infer the promotional objectives of manufacturers. Using data from the 1996-2003 Medical Expenditure Panel Survey (MEPS), we find that advertising shifts the demand curve for antidepressants outward and rotates it counter-clockwise. DTCA increases the probability that an individual will initiate use of antidepressants, particularly when out-of-pocket medication costs are low, but does not necessarily increase utilization levels among those already taking antidepressants. This is consistent with a promotional campaign that seeks to alert consumers to the product's existence, but conveys no real information that would allow them to learn their true match with the product.