Direct-to-Consumer Advertising and Patient Therapy Compliance

Because of arms length relationship with patients, pharmaceutical manufacturers have paid much attention to DTC’s ability to impact compliance. Contrary to many industry surveys, this paper finds that the impact of compliance is small in economic terms, it spills over to other brands and, in certain instances, it may decrease average compliance rates. ∗This paper appeared as part of my Spring 2002 UC Berkeley dissertation entitled “The Economics of Prescription Drug Advertising.” I would like to thank my dissertation committee, Benjamin Hermalin, Paul Gertler, Aviv Nevo and Tülin Erdem, for their comments, support and encouragement. I would also like to thank the Editor and two anonymous referees for their suggestions. I have benefited from feedback given by seminar participants at the Harvard Business School and the IBER productivity luncheon. I thank Nancy Stalker of Blue Shield of California for making data available for this project and the Agency for Healthcare Research and Quality for funding this project through a grant R03 HS11600. The UC Berkeley Center for Health Research and the UC Berkeley Institute for Business and Economic Research for providing additional financial support. Author’s contact information: Marta Wosińska, Assistant Professor, Harvard Business School, Boston MA 02163, phone:(617) 495-6548, fax: (617) 496-5853, email: [email protected].