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How DTCA Influences Prescription Pharmaceutical Markets

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Innovation and Marketing in the Pharmaceutical Industry

Part of the book series: International Series in Quantitative Marketing ((ISQM,volume 20))

Abstract

This chapter focuses on the potential influence of direct-to-consumer advertising (DTCA) on firm strategy, patients, physicians, and policy change. Particularly, we identify the chain of DTCA influence through which public policy actions, such as DTCA (de)regulation, prompt firm decisions as to whether or not to engage in DTCA, which drugs to pick for direct-to-consumer communication, and how much to allocate to DTCA versus the marketing-mix direct-to-physician (DTP). We highlight the importance of disentangling DTCA effects on the two main stakeholders, patient and the physician, to unravel the intricacies of prescription decisions. With this aim, we analyze a data set for three top-selling classes in the USA, namely, proton-pump inhibitors (PPIs), selective serotonin reuptake inhibitors (SSRIs), and HMG-CoA reductase inhibitors (Statins). The results confirm extant research and suggest that DTCA exhibits oversaturation effects later in the life cycle of a therapeutic class and is unlikely to be the major driver of pharmaceutical sales. On the other hand, DTP spending appears to be more influential and resistant to life cycle effects.

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Notes

  1. 1.

    Interestingly, Lyles (2002), in his historical perspective on DTCA, notes that prior to 1930 direct-to-consumer communication was rather the norm in the USA.

  2. 2.

    The meta-analysis by Kremer et al. (2008) examines 156 DTCA elasticities from 17 studies. Of those, two analyze data before the 1997 clarification and three were working papers at the time of the publication. Since then relatively few econometric studies have been published, most notably Fischer and Albers (2010) and Kolsarici and Vakratsas (2010).

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Author information

Authors and Affiliations

  1. Desautels Faculty of Management, McGill University, Montreal, QC, Canada

    Demetrios Vakratsas

  2. Queen’s University, School of Business, Kingston, ON, Canada

    Ceren Kolsarici

Authors
  1. Demetrios Vakratsas
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  2. Ceren Kolsarici
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Corresponding author

Correspondence to Demetrios Vakratsas .

Editor information

Editors and Affiliations

  1. Smeal College of Business, The Pennsylvania State University, University Park, Pennsylvania, USA

    Min Ding

  2. The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania, USA

    Jehoshua Eliashberg

  3. Department of Business Economics, Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, The Netherlands

    Stefan Stremersch

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Vakratsas, D., Kolsarici, C. (2014). How DTCA Influences Prescription Pharmaceutical Markets. In: Ding, M., Eliashberg, J., Stremersch, S. (eds) Innovation and Marketing in the Pharmaceutical Industry. International Series in Quantitative Marketing, vol 20. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-7801-0_22

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