Resident Scholar John  E. Calfee

Advertising is widely seen by economists and regulators as beneficial to markets and consumers.[1] The prescription drug market offers exceptional opportunities[2,3] for direct-to-consumer advertising (DTCA) to provide new-product information, improve compliance, alleviate widespread underdiagnosis and undertreatment,[4] and motivate new-product development.[5] DTCA can also induce excess or even dangerous prescribing, however, partly because patients are poorly informed and usually pay far less than the full cost of drugs. Empirical research can help resolve these issues.

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John E. Calfee is a resident scholar at AEI.