Biomedical Engineering Reference
In-Depth Information
introduction of DTCA change firm strategies regarding the allocation of the marketing
mix? This will require detailed databases that cover a sufficiently long period before a
policy shift (i.e., 1997 in the USA). (b) Do firms coordinate DTCA and DTP activi-
ties? Our data showed that frequently DTCA is allocated as a given proportion of DTP
allocation but our findings suggested that perhaps this is not the most suitable option.
In addition, after discussing with pharmaceutical executives, the authors were sur-
prised to find that firms do not always make DTCA and DTP decisions simultane-
ously, (c) how do prices, DTCA, and DTP are related and what is the role of regulation
and out-of-pocket pay? Although there is limited evidence supporting DTCA and
pricing interactions, there are many factors that enter the pricing decision in the phar-
maceutical industry such as co-payment, insurance coverage limits, and generic sub-
stitution. Only after carefully examining these, a definitive answer can be provided.
Finally, more econometric studies are necessary to further investigate the effect
of informational content on prescriptions. Regulations offer opportunities for
experiment-like conditions by allowing three different types of ads with varying
content: help-seeking, reminder, and product claim. So far only Kolsarici and
Vakratsas (
2010
) have provided empirical evidence on the effects of different types
of ads, but more research is needed on this topic. Even in the case of product claim
ads there could be varying degrees of brand vs. category-related information (e.g.,
Amaldoss and He
2009
). An investigation of the most effective mix of these two
types of information can guide pharmaceutical firms to strike the right informa-
tional balance in their messages, thus improving welfare effects and further reduc-
ing their advertising waste. A cross-country analysis could also shed light on the
effect of each regulatory regime on pharmaceutical sales and the effectiveness of the
different marketing-mix instruments. For example, a comparison among USA,
Canada, and the UK, which represent the three types of regulatory regimes, liberal
(USA), moderate (Canada), and strict (UK), adjusting for national characteristics
and local conditions, could provide a more definitive answer on the effects of regu-
lations. Of particular interest will be to examine whether DTP elasticities are lower
in more liberal regulatory regimes, hence suggesting that DTCA is a “substitute” of
DTP, or whether the introduction of DTCA contributes to an increased overall
elasticity to all promotional expenditures.
In sum, research so far has focused on the economic effect of DTCA and found
it to be small. Thus, from this perspective it does not appear that DTCA has a
“destructive” effect as it does not boost the market power of pharmaceutical firms.
Furthermore, DTP activities such as detailing are much more effective in increasing
pharmaceutical sales suggesting that the physician is still in control of the decision-
making process. Our empirical analysis also confirmed these findings and suggested
that DTCA exhibits oversaturation effects later in the life cycle of a therapeutic
class and is unlikely to be the major driver of pharmaceutical sales. On the other
hand, DTP spending appears to be more influential and resistant to life cycle effects.
Future research should focus more on the welfare benefits of DTCA through the
analysis of individual-level databases that track information on patients as well as
the physicians that treat them, in order to provide a deeper understanding of the
DTCA effect on physician-patient interaction and decision-making.
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