Impact of Direct-to-Consumer Advertising on Pharmaceutical Prices and Demand

Prescription drug expenditures are the fastest growing component of health care spending,rising threefold over the 1995-2007 period. Coinciding with this growth has been a surge in direct-to-consumer advertising (DTCA), made feasible by the Food and Drug Administrations's (FDA's) clarification of rules governing broadcast advertising in 1997 and 1999. We exploit this natural experiment to inves…