Spillovers and Other Externalities in Pharmaceutical Marketing - Innovation and Marketing in the Pharmaceutical Industry - page 676

This requirement made it virtually impossible to create TV DTCA, because the
required risk information could not be packed into such a limited exposure
interval.
Overall therefore, the 1985 ruling encouraged pharmaceutical firms to advertise
their prescription medications more aggressively and more broadly in print media
until the early 1990s. Around this time, a few firms took the lead in sponsoring non-
product-speciic advertising on commercial TV (e.g., “help-seeking” ads that
describe disease symptoms without mentioning a specific product; “reminder” ads
that encourage patients to consult their doctor, or that mention a drug's name without
stating its indications—see Pines 1999 ). FDA considered such commercials poten-
tially confusing to consumers.
At the same time, though, FDA faced an increasing demand from consumers for
more information and clarity about prescription drugs. To investigate policy options,
FDA announced a public hearing about DTCA in 1995. Following extensive delib-
erations in 1996, FDA issued a “draft guidance” document in August 1997 that was
targeted at the pharmaceutical industry. This document specifically allowed product-
specific TV advertising for prescription drugs. It clarified that, in a product-specific
TV ad, the “adequate provision” standard could be met with a reference to one or
more of the following sources that provide additional information: a toll-free
number, a website address, or a print ad running simultaneously. The TV DTCA
also had to contain a “major statement” of risks. In August 1999, the FDA issued a
“final guidance” on TV DTCA that reaffirmed the provisions in the draft guidance.
As a result, DTCA is “here to stay” (Pines 1999 , p. 518). Even though the FDA
launched a DTCA policy review in 2003, its broad goal remains stable, i.e., to
encourage the flow of accurate information about prescription drugs to consumers
to assure their active participation in decisions relating to their own treatment.
The following factors point to a spillover of DTCA from the USA into Canada.
Generally, consumers are highly involved with DTCA because it is a tool that
empowers them on important healthcare matters. This involvement is exacerbated
for Canadian consumers because they face an information vacuum that is artificially
mandated by regulations banning DTCA. Further, researchers share the view that it
is difficult for Canada to effectively enforce this ban. And, several US-based maga-
zines that are circulated in Canada do not have Canada-specific production-runs
(see Mintzes et al. 2001 ). As a result, consumers from both the USA and Canada are
exposed to the same print DTCA. In addition, US-based TV broadcast signals are
carried into Canada regularly (Papp 1997 ). With this setup in mind, we now illustrate a
possible approach to empirically explore the impact of this type of spillover.

23.3.1 Overview of the Data

For this illustration, we use data for a specific ethical drug subcategory—nasal
steroids. This category was launched at the same time in the US and Canadian
markets and experienced significant DTCA since 1997 when the laws governing