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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

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The Shape of Demand: What Does It Tell Us about Direct-to-Consumer Marketing of Antidepressants?

Chad D. Meyerhoefer1 / Samuel H Zuvekas2

1Agency for Healthcare Research and Quality,

2Agency for Healthcare Research and Quality,

Citation Information: The B.E. Journal of Economic Analysis & Policy. Volume 8, Issue 2, ISSN (Online) 1935-1682, DOI: https://doi.org/10.2202/1935-1682.1805, January 2008

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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.

Keywords: pharmaceutical demand; advertising; panel data

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