Biomedical Engineering Reference
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degree of brand specificity makes DTCA less synergistic as it has a limited market
expansion effect. Bala and Bhardwaj (
2010
) also consider the “constructiveness”
vs. the “combativeness” of DTCA and find that when the market is largely untapped
firms should utilize constructive DTCA, whereas when the market is mature firms
should employ combative DTCA. These findings are in agreement with the previ-
ously discussed empirical results of Kolsarici and Vakratsas (
2010
).
22.3.1
Strategic Implications for Firms
From a strategic perspective the evidence suggests that pharmaceutical firms are
quite selective, and hence deliberate, in their decision to advertise: DTCA advertising
is highly concentrated on new, high quality drugs with upside potential (Iizuka
2004
). According to marketing theory these types of markets offer the best
opportunity for high advertising elasticities as there is a bigger potential to educate
consumers (e.g., Vakratsas and Ambler
1999
).
However, given the small economic effect of DTCA, particularly on brand sales,
the question is why firms continue to advertise directly to consumers. Current evi-
dence cannot adequately provide an answer to this question. One possibility is that
firms attempt to gain the long-term loyalty of patients (and potentially physicians).
Although the critical issue of prescription switching has not been researched,
Wosinska's (
2005
) results on positive brand advertising spillover effects on compet-
ing drug compliance (Table
22.2
) suggest that such an effect may be unlikely.
Another possibility is the stock-market explanation recently offered by Osinga et al.
(
2011
). The lack of a definitive answer on why firms utilize DTCA despite low
returns may be traced to the scarcity of individual-level analyses. Given that adver-
tising is one of the most versatile marketing tools with many potential effects, these
need to be investigated more thoroughly. For example, if DTCA initiates some form
of hierarchy of effects according to which DTCA prompts more information search
(possibly online) that results in a patient visit where a meaningful interaction
between the patient and the physician takes place before a prescription decision is
made, there are many steps to be traced. To our knowledge this issue has not been
comprehensively investigated via a formal econometric analysis and the main rea-
son is that it imposes daunting data requirements. In our conclusion section we will
discuss in more detail such data requirements that can potentially move the issue of
DTCA influence forward.
22.3.2
Remaining Concerns
The lack of empirical evidence on potentially “destructive” effects does not
“absolve” DTCA as there remain a number of legitimate concerns regarding the
content and form of delivery to consumers. Even proponents of deregulation admit
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