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date: 09 July 2020

Abstract and Keywords

This article reviews research on the economics of pharmaceutical promotion and advertising. The economics of advertising is a long-standing part of the field of industrial organization. The economics of pharmaceutical advertising is beginning to emerge as a separate subfield, at the intersection of industrial organization and health economics. The review tries to put recent research on pharmaceutical advertising into this broader context, placing special emphasis on empirical research. It provides some history about the regulatory environment that governs the promotion of pharmaceutical products, and briefly considers data on its recent level and trends. It sketches a simple model of advertising decisions by pharmaceutical firms and uses the model as a framework to understand broad patterns in advertising practices. Next, it reviews empirical research concerning the impact of advertising on the demand for prescription drugs, emphasizing the challenges posed by data aggregation and endogeneity issues. The final section concludes by outlining possible directions for future work.

Keywords: economics, pharmaceutical promotion, pharmaceutical advertising, prescription drugs, drug demand

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