title: Pharmaceutical advertising and Medicare Part D.
abstract: We explore how and to what extent prescription drug insurance expansions affect incentives for pharmaceutical advertising. When insurance expansions make markets more profitable, firms respond by boosting advertising. Theory suggests this effect will be magnified in the least competitive drug classes, where firms internalize a larger share of the benefits from advertising. Empirically, we find that the implementation of Part D coincides with a 14-19% increase in total advertising expenditures. This effect is indeed concentrated in the least competitive drug classes. The additional advertising raised utilization among non-elderly patients outside the Part D program by about 3.6%. This is roughly half of the direct utilization effect of Part D on elderly beneficiaries. The results suggest the presence of considerable spillover effects from publicly subsidized prescription drug insurance on the utilization and welfare of consumers outside the program.
authors.affiliation: University of Southern California, United States.
authors.forename: Darius
authors.initials: D
authors.lastname: Lakdawalla
authors.forename: Neeraj
authors.initials: N
authors.lastname: Sood
authors.forename: Qian
authors.initials: Q
authors.lastname: Gu
mesh_terms: D000329:Advertising; D004345:Drug Industry; D004465:Economic Competition / Q000706:statistics & numerical data; D036262:Empirical Research; D006801:Humans; D019458:Insurance Coverage / Q000706:statistics & numerical data*; D054524:Medicare Part D; D055553:Prescription Drugs; D014481:United States
chemical_list: D055553:Prescription Drugs
keywords: Advertising; I11; I13; Insurance; Medicare; Prescription drugs