Direct-to-Consumer Advertising and Drug Therapy Compliance
Published 8/1/2005
Author: Marta Wosinska
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Executive Summary
A patient’s noncompliance with drug regimens can render drugs ineffective. Poor compliance leads to lower customer retention and results in lowered prescription revenue; by some estimates, poor compliance is responsible for a loss of $15–$20 billion annually. Because manufacturers have few ways to influence patients’ compliance directly, direct-to-consumer advertising seems to present a new opportunity. There are reasons to believe that advertising may increase compliance with prescribed therapy: It may generate or reinforce an understanding of the drug’s long-term benefits or may simply remind the patient to take the medication.
This article aims to quantify the economic magnitude that direct-to-consumer drug advertising has on brand sales through decreased interpurchase time. Using a four-year panel of prescription claims for more than 16,000 patients, the author analyzes the impact of advertising on the number of noncompliant days for each therapy month. The article studies compliance in one asymptomatic category, cholesterol-lowering drugs, and notes three distinct advertising effects. First, after controlling for condition severity, patients who begin drug therapy following high category advertising appear be more compliant, possibly because they initiate the process and thus are more motivated. Second, advertising has an intertemporal, categorywide effect on compliance; namely, compliance is greater when other brands advertise more heavily. However, the effect of own-advertising varies across brands; it is positive for two of the studied brands and negative for one. The negative effect of advertising seems to result from patients learning new information about the risks associated with the therapy; tests show that this negative effect only applies to the salient television advertising and only affects patients for whom side-effect warnings are new information.
Even setting the detrimental effect aside, the results of this analysis contrast with the optimistic industry take on the magnitude of the compliance-improving aspects of drug advertising. The author finds the advertising effects to be significant statistically, though economically, the return on advertising is only cents on a dollar. This already low advertising effect is likely to be smaller in other therapeutic categories; the category chosen for this study is a good candidate for finding possible advertising effects because the condition is asymptomatic and the consequences of noncompliance (an increased probability of coronary disease) are removed far into the future. Nonetheless, even minimal sales resulting from improved compliance are a win because drug advertising campaigns have thus far been done with customer acquisition, not retention, in mind.
Biography
Marta Wosinska is Assistant Professor of Marketing in the Harvard Business School at Harvard University. She received her doctoral degree in Economics from University of California at Berkeley (2002) and her bachelor’s degree in Economics from Arizona State University (1996). Her interest in health care, particularly in pharmaceuticals, focuses on the effectiveness of marketing instruments in patient acquisition and retention.
J Marketing Research, Volume 42, Number 3, August 2005
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