The effect of direct-to-consumer advertising of prescription drugs on retail gross margins: Empirical evidence and public policy implications

Journal of Public Policy and Marketing

Volumn 16, Issue 2, 1997, Pages 270-276

  Kopp, Steven W ^a   Sheffet, Mary Jane ^b  

^a University of Arkansas   (United States)

^b UNIVERSITY OF NORTHERN IOWA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0031314007     PISSN: 07439156     EISSN: 15477207     Source Type: Journal    
DOI: 10.1177/074391569701600207     Document Type: Article

References (73)

1. Abbott, Thomas A., III (1995), "Price Regulation in the Pharmaceutical Industry: Prescription or Placebo?" Journal of Health Economics, 14 (December), 551-65.
2. Adams, David G. (1994), "FDA Regulation of Communications on Pharmaceutical Products," Seton Hall Law Review, 24 (3), 1399-417.
3. Albion, Mark S. (1983), Advertising's Hidden Effects: Manufacturers' Advertising and Retail Pricing. Boston: Auburn House.
4. _ and Paul W. Farris (1981), "The Effect of Manufacturer Advertising on Retail Pricing," Working Paper No. 81-105, Marketing Science Institute, Cambridge, MA.
5. _ and _ (1987), "Manufacturer Advertising and Retail Gross Margins," in Advances in Marketing and Public Policy, Vol. 1, Paul N. Bloom, ed. Greenwich, CT: JAI Press, 107-35.
6. Alperstein, Neil M. and Mark Peyrot (1993), "Consumer Awareness of Prescription Drug Advertising," Journal of Advertising Research, 33 (July/August), 50-56.
7. American Drugs, Inc. et al. v. Wal-Mart Stores, Inc. (1993), Arkansas Chane. Ct., CCH #70, 382 (October).
8. Bass, I. Scott and Stacey Hallerman (1993), "Prescription Drug Advertising Under the Lanham Act," Trade Mark Reporter, 83 (July/August), 521-53.
9. Beales, J. Howard, III (1994), "Economic Analysis and the Regulation of Pharmaceutical Advertising," Seton Hall Law Review, 24 (3), 1370-98.
10. Bureau of Consumer Protection and the Bureau of Economics of the Federal Trade Commission (1995), In the Matter of Directto-Consumer Promotion: Comments of the Staff of the Bureau of Consumer Protection and the Bureau of Economics of the Federal Trade Commission, Public Hearing Docket No. 95N-0227 (January 11).
11. "Business Watch" (1996), Medical Marketing & Media, May [downloaded from http://www.cpsnet.com/mmm/reprints/ may96/watch95.html].
12. Carey, John (1993), "A Bitter Tonic for Drugmakers?" Business Week, 3308 (March 8), 84-86.
13. Caves, Richard E., Michael D. Whinston, and Mark A. Hurwitz (1991), "Patent Expiration, Entry, and Competition in the U.S. Pharmaceutical Industry," in Brookings Papers on Economic Activity, No. 2, Martin Neil Baily and Clifford Winston, eds. Washington, DC: Brookings Institution.
14. Cohen, Eric P. (1990), "Are Pharmaceutical Ads Good Medicine?" Business and Society Review, 73 (Spring), 8-10.
15. Comanor, William S. (1986), "The Political Economy of the Pharmaceutical Industry," Journal of Economic Literature, 24 (September), 1178-217.
16. Consumer Reports (1996), "Drug Advertising: Is This Good Medicine?" 61 (June), 62-63.
17. Cook, Thomas D. and Donald T. Campbell (1979), Quasi-Experimentation: Design & Analysis for Field Settings. Boston: Houghton Mifflin.
18. Cravens, Karen S. and Hubert D. Glover (1995), "Pricing Complexities in the Pharmaceutical Industry: Implications for External Auditors," Managerial Auditing Journal, 10 (7), 8-16.
19. Davis, Joseph L. and Suresh Madhavan (1991), "Should Prescription Drugs Be Advertised to Consumers?" American Druggist, 203 (May), 82-85.
20. Day, Kathleen (1995), "The Doctor Is Out, the Consumer Is In," Washington Post, (November 22), EI.
21. Deutsch, Claudia H. (1989), "The Growing Brouhaha over Drug Ads," The New York Times, (May 14), IF.
22. DiMasi, Joseph A., Ronald W. Hansen, Henry G. Grabowski, and Louis Lasagna (1995), "Research and Development Costs for New Drugs by Therapeutic Category," PharmacoEconomics, 7 (February), 152-69.
23. Farris, Paul W. and Mark S. Albion (1980), "The Impact of Advertising on the Price of Consumer Products," Journal of Marketing, 44 (Summer), 17-35.
24. Freudenheim, Milt (1990), "The Squeeze on Drugstores," The New York Times, (December 4), D2.
25. Gladwell, Malcolm and Paul Farhi (1990), "Drug Firms Offering New Prescription for TV Ads," Washington Post, (January 28), H1.
26. Gorman, Christine (1996), "Border Bargains," Newsweek, (February 19), 54.
27. Grabowski, Henry and John Vernon (1992), "Brand Loyalty, Entry and Price Competition in Pharmaceuticals after the 1984 Drug Act," Journal of Law and Economics, 35 (October), 331-50.
28. Hatch, Orrin (1996), "Writing the Proper Prescription for Patent Rights," Roll Call, (June 10), 12.
29. Hodnett, Jan (1995), "Targeting Consumers," Medical Marketing & Media, November [downloaded from http://xvww.cpsnet.com/ mmm/reprints/nov95/target.html].
30. Kaplar, Richard T. (1993), Bad Prescription for the First Amendment: FDA Censorship of Drug Advertising and Promotion. Washington, DC: The Media Institute.
31. Kincaid, Marilyn C. (1992), "Direct-to-Consumer Advertising With Added Inducements," Journal of the American Medical Association, 267 (January 22/29), 508.
32. Kusserow, Richard P. (1992), Prescription Drug Promotion Involving Payments and Gifts: Physicians' Perspectives. Office of Inspector General, Department of Health and Human Services, OEI-01-90-00481 (July).
33. Lal, Rajiv and Chakravarthi Narasimhan (1994), "The Impact of Manufacturer Advertising on Retail and Wholesale Margins," Marketing Science, 15 (2), 132-45.
34. Liebermann, Yehoshua and Alex Ayal (1985), "A Test of the Advertising Life-Cycle Theory," International Journal of Advertising, 4, 247-50.
35. Lober, Clifford Warren (1993), "Ethics in Pharmaceutical Advertising," Dermatologic Clinics, 11 (April), 285-88.
36. Maness, Robert and Steven W. Wiggins (1992), "Price Competition in Pharmaceutical Markets," unpublished manuscript, Department of Economics, Texas A&M University.
37. Masson, Alison and Paul H. Rubin (1988), "The Benefits of Direct Advertising," New England Journal of Medicine, 313 (August 22), 513-15.
38. _ and Robert L. Steiner (1985), Generic Substitution and Prescription Drug Prices: Economic Effects of State Drug Product Selection Laws. Staff Report of the Bureau of Economics, Federal Trade Commission, (October).
39. Mossinghoff, Gerald J. (1988), "Response to Potter," New England Journal of Medicine, 319 (September), 798.
40. Norris, Vincent P. (1984), "The Economic Effects of Advertising: A Review of the Literature," in Current Issues and Research in Advertising, Vol. 2. Ann Arbor, MI: University of Michigan.
41. Office of Technology Assessment (1993), Pharmaceutical R&D: Costs, Risks, and Rewards, OTA-H-522. Washington, DC: U.S. Government Printing Office (February).
42. Ono, Yumiko (1994), "Prescription-Drug Makers Heighten HardSell Tactics," The Wall Street Journal, (May 29), BI.
43. Pelton, Lou E., David Strutton, and Mickey C. Smith (1993), "Future Pharmacists and Public Initiatives to Control Retail Drug Prices: A Political Economy Framework," Health Marketing Quarterly, 10 (3/4), 241-59.
44. Porter, Michael E. (1974), Consumer Behavior, Retailer Power and Market Performance in Consumer Goods Industries. Boston: Harvard University Press.
45. Rogers, Alison (1986), "Prescription Drug Ads Still Cloudy," Ad Week, 27 (April 28), 18.
46. Scherer, F. M. and David Ross (1990), Industrial Market Structure and Economic Performance, 3rd ed. Boston: Houghton Mifflin.
47. Schondelmeyer, Stephen W. and Joseph Thomas III (1990), "Trends in Retail Prescription Expenditures," Health Affairs, 9 (Fall), 131-45.
48. Schrader, Julie Toner (1993), "Controversial Issues Surrounding Direct-to-Consumer Advertisements of Prescription Drugs," Developments in Marketing Science, Vol. 16, Michael Levy and Dhruv Grewal, eds. Coral Gables, FL: Academy of Marketing Science, 570-75.
49. Sheffet, Mary Jane and Steven W. Kopp (1990), "Advertising Prescription Drugs to the Public: Headache or Relief?" Journal of Public Policy & Marketing, 9, 42-61.
50. Smeeding, James E. (1990), "Direct-to-Consumer Advertising of Prescription Pharmaceuticals: Strategic Issues for the Pharmaceutical Industry," Topics in Hospital Pharmacy Management, 10 (May), 40-64.
51. Starr, Paul (1982), The Social Transformation of American Medicine. New York: Basic Books.
52. Statman, Meir and Tyzoon T. Tyebjee (1981), "Trademarks, Patents, and Innovation in the Ethical Drug Industry," Journal of Marketing, 45 (Summer), 71-81.
53. Steiner, Robert L. (1973), "Does Advertising Lower Consumer Prices?" Journal of Marketing, 37 (October), 19-26.
54. _ (1984), "Basic Relationships in Consumer Goods Industries," Research in Marketing, 7, 165-208.
55. _ (1991a), "Intraband Competition - Stepchild of Antitrust," Antitrust Bulletin, 36 (Spring), 155-200.
56. _ (1991b), "Manufacturers' Promotional Allowances, Free Riders, and Vertical Restraints," Antitrust Bulletin, 36 (Summer), 383-411.
57. _ (1993), "The Inverse Association Between the Margins of Manufacturers and Retailers," Review of Industrial Organization, 8 (December), 717-40.
58. Tanouye, Elyse (1996), "Although Inflation Barely Breathing, Drug Prices Are Showing a Stronger Pulse," The Wall Street Journal, (February 16), A2.
59. Tellis, Gerard J. and Claes Fornell (1988), "The Relationship Between Advertising and Product Quality Over the Product Life Cycle: A Contingency Theory," Journal of Marketing Research, 25 (February), 64-71.
60. Ukens, Carol (1995), "Chain Gang: Chains Extend Lead to Half of Rx Market," Drug Topics, 139 (May 8), 49.
61. U.S. Government Accounting Office (1991), Prescription Drugs: Little is Known About the Effects of Direct-to-Consumer Advertising: Report to the Chairman, Subcommittee on Oversight and Investigations, PEMD-91-19 (July), Washington, DC.
62. U.S. Senate (1961), A Study of Administered Prices in the Drug Industry. 87th Congress, 1st Session, (June 27), Report 448, Washington, DC.
63. U.S. Senate Committee on Labor and Human Resources (1991), Advertising, Marketing, and Promotional Practices of the Pharmaceutical Industry: Hearing before the Committee on Labor and Human Resources. 101st Congress, 2nd Session, Serial Number 101-1217. Washington, DC: U.S. Government Printing Office.
64. U.S. Senate Special Committee on Aging (1991), The Drug Manufacturing Industry: A Prescription for Profits, Serial Number 102-F. Washington, DC: U.S. Government Printing Office, (September).
65. _ (1994), A Report on 1993 Pharmaceutical Price Inflation: Drug Prices for Older Americans Still Increasing Much Faster than Inflation. Washington, DC: U.S. Government Printing Office, (January).
66. U.S. Senate Subcommittee on Regulation, Business Opportunities, and Technology of the Committee on Small Business (1995), Questionable Sales Practices in the Drug Industry: Hearing before the Subcommittee on Regulation, Business Opportunities, and Technology of the Committee on Small Business, Serial Number 103-107 (October 12, 1994). Washington, DC: U.S. Government Printing Office.
67. Waldholz, Michael (1992), "Specter of Regulation Sets Off Price War," The Wall Street Journal, (September 25), A6.
68. Waud, Douglas R. (1992), "Pharmaceutical Promotions - A Free Lunch?" New England Journal of Medicine, 327 (July 30), 351-53.
69. Weber, Joseph (1995), "Take Two Aspirin and Call in the Morning," Business Week, (January 9), 79.
70. Weidenbaum, Murray (1993), "Are Drug Prices Too High?" Public Interest, 112 (Summer), 84-89.
71. Wilke, Michael (1997), "Ad Fever Sweeps Healthcare Industry," Advertising Age, (January 13), 1.
72. Williams, James R. and Paul J. Hensel (1995), "Direct-to-Consumer Advertising of Prescription Drugs," Journal of Health Care Marketing, 15 (Spring), 35-41.
73. Wolfe, Sidney M. (1996), "Why Do American Drug Companies Spend More Than $12 Billion a Year Pushing Drugs? Is it Education or Promotion?" Journal of General Internal Medicine, 11 (October), 637-39.