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we're here today with Wharton healthcare management professor Abbe Alpert to talk
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about some of her recent research Abbi thanks for being with us thank you so first of all could you give us a brief
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summary of what you studied so my research is in health economics and public finance and my recent work has
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focused on the pharmaceutical market so in a recent project I've studied the
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impacts of direct to consumer advertising for prescription drugs on drug utilization and rugged here ins so
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we've seen a very dramatic increase in the number of pharmaceutical ads on TV
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in the last two decades pharmaceuticals are now one of the largest categories of
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advertising on TV and over four billion dollars is spent on this type of advertising and economists have been
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interested for a long time in understanding the extent to which advertising is informative versus
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persuasive and pharmaceutical advertising is particularly controversial in this respect and there
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has been a lot of debate about its potential effects on patient welfare so on the one hand advertising may have
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informational value if it educates patients about available treatments encourages people to seek care
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especially for undirected I ignore scans or it may even improve communication between patients and their doctors for
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people who are already taking advertising medications seeing an ad on TV for your drug could serve as a
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reminder to take your medication or it may even enhance your perception of the benefits of treatment potentially
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leading to better drug adherence on the other hand a drug advertising may also lead to unnecessary overuse of
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prescription drugs and increased drug spending and so in this project we are trying to quantify the extent to which
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advertising impacts drug utilization and we also explore some of the mechanisms underlying advertisings impacts and this
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helps us to try to understand some of the health and welfare implications of advertising so to do this we use a
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natural experiment design which helps us get at the causal effects of advertising
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on our natural experiment is the introduction of Medicare Part D in 2006 so using data from the Nielsen
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corporation we find that there was a sharp increase in pharmaceutical advertising immediately following the
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introduction of Part C and that this advertising was targeted to markets with the highest concentration of elderly so
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places like West Palm Beach Florida for example we also find that this advertising spilled over onto younger
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consumers in these markets even though it was targeted to the older consumers and that they also experienced increased
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exposure to drug ads after Part D and so this sets the stage for our research design because what we do is compare
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drug advertising before and after party across geographic areas with a higher or
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lower concentration of elderly and then we use this change in advertising exposure due to Part D to estimate its
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effects on drug utilization for the non elderly so people who are under age 65 and not eligible for Medicare and we
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focus on the non-elderly population in order to isolate the effects of advertising on drug utilization from the
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direct effects of the Part D program so to give a simple example our strategy basically boils down to a comparison
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across areas like West Palm Beach Florida with a large elderly population and areas like Denver with a much
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younger population so young people living in West Palm Beach are going to be exposed to a larger increase in drug
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advertising after party relative to their peers living in Denver and then we test whether this also leads to a
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differential increase in drug use and our data on drug utilization comes from a very large database of insurance
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claims which covers a wide variety of geographic areas so after looking at this what were some of your key
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takeaways I mean where did you have a bunch of young people in West Palm Beach one like take I don't know a heart
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medication or like stuff that older people would take or I mean what did you find so we find substantial effects of
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advertising on drug utilization we estimate that percent in advertising exposure we
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increase the number of prescriptions purchased by about 5% about 70% of this effect is driven by increased new
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initiation and the other 30% is due to increase drug use among existing patients so in other words increased
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drug adherence and specifically we find that a 10% increase in advertising would
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increase the rate of drug adherence by about one to two percent so while advertising increases drug adherence
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among existing patients we also find that among people who initiate treatment because of advertising their compliance
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with treatment is actually lower on average and so this is a concern if advertising is capturing people for whom
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treatment is marginally less appropriate or for people who are simply less attached to treatment because initiating
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a treatment without complying with it will lead to increased drug spending without very many gains to health also
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another finding we have is that there was a large spillover effect of advertising on non advertised drugs
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within the same drug classes so these non advertised drugs are typically generics or off pen brands and the idea
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here is that someone sees an ad on TV for lipitor ask their doctor for lipitor but then gets prescribed another statin
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or a generic drug and so what we're finding is that advertising expands utilization for entire classes of drugs
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so could you talk to us a little bit about the practical implications of this paper I mean I could see it having
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pretty broad ones just because it involves both prescription drug companies and doctors and then also even
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patients who are seeing this stuff on TV so pharmaceutical advertising has been in the news a lot lately because the
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American Medical Association recently called for a ban on all direct to consumer advertising for prescription
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drugs the u.s. is actually only one of two countries in the world that allows this type of advertising and they argue
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that drug advertising leads to substitute away from low-cost generic drugs towards more expensive brands even
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when they're not appropriate and so our research can help to inform this debate
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while our findings show that advertising does indeed increase drug spending we also find that advertising may have
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health benefits because it increases drug adherence and also increases the take-up of important drugs for
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treatments like high cholesterol hypertension depression and others although we can't exactly and fully
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tease out appropriate versus inappropriate use in our study more concerning though is that we find that
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people who initiate drug treatment because of advertising are on average less compliant with treatment and so
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this could mitigate some of these health gains we also find that a significant share of the increase in drug
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utilization driven by advertising is actually for non advertised drugs which tend to be lower cost generics and
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off-patent brands another implication of this research is that we find that there
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were very large spillover effects of Medicare Part D on the non-elderly population outside of the Medicare
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program and these effects are large and important on their own it may warrant some consideration by policymakers I
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guess what I was wondering is I mean the idea if you're saying that people who
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see these ads I mean they may it may bring them to the doctor but it also might mean that they're less compliant
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but someone that came another way I guess what implications does this have for like how physicians should maybe
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treat patients that have seen this because of an ad if they if they know I mean is it sort of given give tips about
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how they might be able to mitigate some of those negative impacts that you think
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right so we find that people who are initiating treatment because of advertising or less adherent and so
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doctors should be potentially aware that people who are coming in asking for treatment may not be as as eligible for
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that treatment or as likely to comply with it and may require more monitoring and more assessment of whether that
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treatment is appropriate for them compared to someone who who the doctor would decide needed this treatment
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and what what's next for this researcher what are you going to look at next so
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our current findings show very detailed picture of the utilization responses to advertising and I think the next thing
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that I'm interested in pursuing is to use our research design to analyze the
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effects of advertising on health more directly as well as isolating appropriate versus inappropriate use to
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do this requires detailed data on health outcomes data and mortality and also data on more intermediate outcomes like
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hospitalizations or other clinical outcomes but I think that really the ultimate test of whether pharmaceutical
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advertising improves welfare is is its effects on health directly and currently there's very little evidence on
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advertising's effects on health and I think this is an important area for future research Abbi thanks so much for
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being with us today thank you you