The Impact of Direct-to-Consumer Advertising on Outpatient Care Utilization


There is much debate about the effects of pharmaceutical direct to consumer advertising (DTCA) on health care use. In this paper, we inform this debate by examining the effects of DTCA on office visits, as well as treatment courses resulting from those visits, for five common chronic conditions (hypertension, hyperlipidemia, diabetes, depression, and osteoporosis). In particular, we examine whether office visits result in use of drug therapy and/or continued office visits over time. We test these questions by combining data on pharmaceutical advertising from Nielsen with claims data from 40 large national employers, covering 18 million person-years (2004-2010). We analyze a non-elderly population by exploiting plausibly exogenous variation in advertising exposure across areas by exploiting the fact that the implementation of Medicare prescription drug coverage led to larger increases in advertising in areas with high elderly share of population compared to low elderly share areas. We find that advertising increases the number of office visits for the non-elderly for the advertised condition. We also find substantial spillovers – a large share of the increased office visits from advertising do not result in use of drugs or are associated with use of generic drugs. Finally, we find that the increase in office visits due to DTCA is associated with multiple consecutive follow up visits over time.