Marketing Medicine: The Economic and Public Health Effects of Direct-to-Consumer Pharmaceutical Advertising
- World Scholars Review
- Dec 20, 2025
- 17 min read
Authors: Isabelle Grouette & James W. Roy Jr.
Mentor: Dr. Gerard Dericks (PhD, London School of Economics). Dr. Dericks is currently director of the Center for Entrepreneurship and Economic Education at Hawaii Pacific University.
Abstract
This review examines the purpose, effects, and consequences of direct-to-consumer advertising (DTCA) of prescription drugs by synthesizing findings from clinical research, economic studies, and content analyses. The evidence shows that DTCA is a powerful driver of patient engagement, increasing public awareness of health conditions, encouraging patient–physician communication, and, in some cases, modestly improving treatment adherence. Research also suggests that advertised drugs are not necessarily of lower quality and that physicians often retain clinical discretion when responding to patient requests. At the same time, DTCA is associated with significant drawbacks, including increased prescription drug spending, inflated patient expectations, and a higher likelihood of prescribing in situations where clinical benefit is uncertain. Content analyses further indicate that DTCA frequently emphasizes emotional appeals and benefits while downplaying risks, contributing to misunderstandings about drug safety and regulation. Overall, the findings suggest that DTCA simultaneously expands access to treatment and exacerbates misinformation, over-treatment, and rising health care costs. This dual effect helps explain the ongoing controversy surrounding DTCA and highlights the need for stronger regulatory oversight to balance patient engagement with public health protection.
Introduction
Direct-to-consumer advertising (DTCA) is a form of pharmaceutical marketing in which drug companies promote prescription medications directly to the general public through television, print, and social media, as opposed to marketing directly to the physician. DTCA is legal in only two countries in the world, the United States and New Zealand. In the U.S, DTCA expanded dramatically after 1997, when the FDA relaxed broadcast advertising rules and allowed companies to air commercials without listing all risks in full, if they then directed viewers to additional information. It was this regulatory shift that triggered a massive rise in advertising spending and subsequently transformed DTCA into the central marketing strategy for major drug companies. New Zealand also allows DTCA; however policy policymakers there have repeatedly debated removing it. Most other countries, including the United Kingdom, Canada, and the European Union, ban DTCA for pharmaceutical drugs. This is because of concerns about misinformation, inflated drug demand, and inappropriate prescribing. As a result, the U.S and New Zealand stand alone in permitting direct advertising of prescription medications.
Unlike traditional physician-directed promotion, DTCA encourages patients themselves to look for and recognize symptoms, consider specific drugs, and bring these ideas to medical appointments. Proponents claim that DTCA increases public awareness of illnesses, boosts diagnosis rates for conditions like depression, and prompts more patients to initiate conversations about treatment options with medical professionals. However, DTCA remains controversial due to potential harms, including the potential for ads to prioritize persuasion and profit rather than balanced, realistic information. Moreover, as patients bring expectations created by advertisements to doctor offices, physicians report feeling pressured to prescribe even in instances when the requested medication is not appropriate, thereby weakening doctor-patient trust and simultaneously increasing the likelihood of over-treatment. Another drawback for DTCA is its link to high social costs as it encourages the use of more expensive brand-name drugs, raises overall drug spending, promotes anti-competitive drug markets, and strains healthcare workloads. These combined problems of misinformation, weakened clinical relationships, over-treatment, and rising costs are why DTCA remains one of the most controversial practices in modern healthcare.
Whatever the relative merits of DTCA, it is clear that the practice is highly profitable. Research consistently demonstrates that DTCA increases treatment initiation, expands drug markets, and raises overall demand for advertised drugs. For example, Donohue et al. (2004) found that higher DTCA spending significantly increased the number of patients beginning antidepressant therapy, even though treatment quality barely improved. Meaning that through this marketing strategy, companies gained new customers without needing to improve outcomes. Studies of real and simulated patient visits show similar patterns: DTCA prompts more patients to request brand-name medications, and physicians often respond by prescribing the requested drug (Gellad & Lyles, 2007). At the financial level, industry-wide analyses confirm a direct relationship between advertising directly to consumers and profitability. Rahman et al. (2019) show that firms with the most effective DTCA strategies enjoy higher returns on assets, equity, and profit margins, proving that advertising directly boosts financial performance. Overall, the evidence makes one unmistakable conclusion: DTCA reliably increases demand, raises profits, and strengthens the market power of pharmaceutical companies, regardless of its mixed effects on public health.
Literature Review
Benefits
While direct-to-consumer advertising (DTCA) is used by pharmaceutical corporations to influence consumers and increase profit, research has additionally shown benefits from these advertisements that may be overlooked. The primary benefits of DTCA for pharmaceutical companies and the public center on driving diagnosis, increasing treatment uptake, and enhancing patient engagement. DTCA raises patient awareness of conditions, prompting them to initiate a dialogue with their doctors, which leads to the diagnosis of previously overlooked illnesses and the initiation of treatment for conditions like depression. This increased awareness and active participation not only helps patients find appropriate care, as physicians generally prescribe a medically suitable option, but also improves patient adherence to prescribed therapies.
Reduced Under-Treatment
DTCA can help doctors diagnose illnesses that would otherwise be overlooked, as patients tell doctors about a condition that they have seen in an ad, leading to the addressing of said condition (Dave, 2013). DTCA advertising has been tied to higher profits from companies, but rather than that being a benefit only to the company, studies have found that pharmaceutical advertisements for their drug led to a greater ability to identify diseases that could be addressed with said medication (Lee-Wingate & Xie, 2013). Another study states that DTCA did not improve the quality of the treatment, but it did increase the likelihood of diagnosis (Donohue et al., 2004). The dialogue between doctors and patients can encourage patients to seek treatment for conditions that are underdiagnosed or under-treated (Ventola, 2011). Consumers view ads listing more symptoms as more informative, which increases their intention to talk to their doctors about the disease and the drug (Lee-Wingate & Xie, 2013). DTCA also leads to higher prescription rates from physicians, but physicians will often not prescribe the requested drug if it would harm the patient, and rather prescribe the more suitable drug (Gellad & Lyles, 2007). Consumers are given a sense of empowerment from DTCA to acknowledge their condition by going to their physician and having a false sense of autonomy when requesting medication (Koinig et al., 2017).
Treatment Adherence
DTCA has been associated with a range of effects on patient adherence and engagement, with findings varying across studies. Some research suggests that DTCA can modestly improve adherence to existing drug therapies by reinforcing the importance of continued medication use (Ventola, 2011) and by encouraging greater patient engagement in care (Peyrot et al., 1998). In addition, the persuasive and affective elements of DTC advertisements may generate a placebo-like effect, increasing adherence among patients who develop stronger beliefs in a medication’s efficacy (Almasi et al., 2006). DTCA has also been shown to increase the likelihood that patients with depression initiate treatment and persist with prescribed medications (Donohue et al., 2004). However, other studies report neutral or even negative effects on adherence, suggesting that DTCA may sometimes lead to confusion, unrealistic expectations, or premature discontinuation of therapy (Cardon & Showalter, 2015). Together, this literature indicates that DTCA’s impact on adherence is heterogeneous and context-dependent rather than uniformly beneficial or harmful.
Quality & Variety
Some studies find that DTCA has little direct relationship to the clinical efficacy of medications themselves (Nagle, 1981; Donohue et al., 2004). However, evidence suggests a correlation between the quality of a drug and the intensity of its advertising, implying that higher-quality medications may be promoted more heavily and, as a result, prescribed more frequently (De Frutos et al., 2013). This dynamic can increase corporate profits while also coinciding with improved treatment outcomes when higher-quality drugs are more widely used. Although critics argue that DTCA often provides insufficient or imbalanced safety information, these concerns primarily call for improvements in the content and regulation of advertising rather than challenging the underlying quality of the prescription medications being promoted, which generally remain clinically sound despite potential misrepresentation in advertisements (Othman et al., 2009).
Drawbacks
While DTCA may provide a number of benefits for patients, it also appears to create a range of challenges that reach far beyond simple marketing. On a broad level, it imposes social costs by pushing expensive brand-name medicines, raising drug prices, and diverting healthcare spending away from patient care. These ads may also contribute to widespread misinformation by emphasizing benefits far more strongly than risks, leaving many people with an incomplete or distorted understanding of the medications they see. As patients bring advertising-driven expectations to the clinic, doctor-patient relationships can weaken as physicians feel pressured to justify their choices or prescribe unnecessary drugs. This dynamic change directly feeds overtreatment, as medications may be requested and prescribed for conditions that are mild, temporary, or not best addressed with drugs at all. Together, these issues show how DTCA can shape healthcare in ways that are costly, confusing, and harmful.
Overtreatment
Direct-to-consumer advertising has repeatedly been shown to push physicians towards treating conditions that, in actuality, may not require medication, thus creating a clear pattern of overtreatment. Research shows that when patients see an ad and believe they have the condition, they bring it up to their doctor, who then provides treatment that otherwise may not have been considered (Lyles, 2002). Studies have also shown that DTCA inflates patients' expectations for doctors, and causes many to request medications that were advertised. This ultimately leads doctors to prescribe simply to meet these new expectations (Almasi et al., 2006). In randomized trials, even mild cases of distress were labeled and medicated when misinformed patients requested advertised antidepressants, demonstrating how DTCA can trigger unnecessary prescribing (Kravitz et al., 2005). Reviews of pharmaceutical promotion confirm the pattern, where DTCA encourages medication use for normal life problems. This contributes to the rising drug spending and the promotion of treatment in cases where any medical benefit is unclear (Dave, 2013).
Evidence from cross-national comparisons also shows that countries with DTCA experience more inappropriate prescribing than those that restrict it (Mintzes, 2012). Physicians in the United States have even gone so far as to report that they feel increased pressure to prescribe (Peyrot et al., 1998). This changed dynamic strains patient-doctor relationships, as physicians may feel pressure to prescribe based on perceived patient expectations or requests, even when the requested drug is not medically indicated (Villanueva et al., 2003). While DTCA promotion is more regulated in the U.S. compared to physician-centered marketing in other countries like India, the strategies still strongly affect physicians' prescribing behaviors and patient trust, prompting calls for stricter ethical training and better consumer awareness (Ibrahim, 2019). In general across the literature, DTCA constantly increases medication demand, influences doctor decision-making, and expands treatment in situations where the drugs may not actually be needed. Overall, making overtreatment one of its most persistent harms.
Healthcare Costs
Direct-to-consumer pharmaceutical advertising creates social costs by driving up drug prices, reducing market competition, and increasing pressure on the healthcare system. Empirical studies show that DTCA encourages consumers to prefer expensive brand-name drugs over equally effective generic options, while theoretical work suggests that allowing DTCA facilitates the maintenance of higher drug prices by weakening price competition and reinforcing brand loyalty (Brekke & Kuhn, 2006). This drains healthcare budgets and shifts spending away from essential services (Villanueva et al, 2003). Advertising also creates brand bias by persuading patients and doctors that the newer drugs are superior, even when in reality they offer no meaningful improvements over the old. This is an effect that allows pharmaceutical companies to price these drugs higher and sustain monopoly advantages (Leffler, 1981; Rizzo, 1999).
As spending on ads increases, companies raise prices to recover marketing costs, contributing to a long-term upward trend in prescription drug prices as well as overall national drug expenditure (Dave, 2013; De Frutos et al., 2013). At the same time, DTCA increases patient demand for office visits, placing additional work on physicians who are forced to address advertising-influenced requests during already busy appointments, straining the medical system (Ventola, 2011; Iizuka & Zhe Jin, 2005). Much of this advertising expense, which runs into the billions annually, may not actually improve health outcomes but instead feeds a promotional cycle that tends to prioritize profit over genuine patient welfare (Outterson & Smith, 2006; Ventola, 2022). Together, the evidence shows that DTCA imposes substantial social costs by raising prices, encouraging anti-competitive market behavior, increasing physician workload, and diverting healthcare money into advertising rather than proper treatment.
Misinformation
While drug companies generally meet the minimum legal requirements to present risk information, the overall volume and presentation of DTCA are heavily dominated by persuasive elements designed to stimulate demand, positioning the ads as tools of influence rather than balanced education (Main et al., 2004). Content analysis of television advertisements reveals that viewers are typically given more time to absorb benefits than risks, raising serious questions about whether the "fair balance" mandated in regulations is actually achieved (Kaphingst et al., 2004). Furthermore, consumers often hold substantial misconceptions about drug safety and regulatory oversight, frequently believing that ads undergo more rigorous review than is actually the case (Bell et al., 1999). This lack of understanding can lead to inappropriate medication use (Wilkes et al., 2000).
The issue of insufficient safety information extends to materials aimed at physicians. Systematic reviews show that advertising in medical journals often contains misleading claims and vague assertions with very little strong scientific backing (Othman et al., 2009; Lankinen, 2004). Moreover, a significant fraction of officially approved drugs are later shown to have significant safety issues. For instance, Downing et al. (2017) found that between 2001-2010 one-third of drugs approved by the FDA had post-market safety downgrades. The claims made in the ads themselves often cite references that are not relevant or do not in fact support the conclusions drawn, a practice that can adversely impact doctors' prescribing behaviors (Lankinen et al., 2004). This persistent lack of balance, transparency, and veracity contributes to the overall risk of misinformation and can lead to the overuse of medications (Ventola, 2023). For vulnerable populations, such as those with bipolar disorder, ads may even use stigma and fear-based messaging that reinforces negative stereotypes instead of providing clear, unbiased educational content (Walker, 2023). DTCA is designed to maximize profits (Rahman et al., 2019) and often achieves this by fostering inaccurate beliefs about a medicine's effects among consumers, which encourages patients to demand specific drugs that might not be most effective for that ailment (Villanueva et al., 2003).
Discussion
Direct-to-Consumer Advertising (DTCA) promotes public health awareness and patient engagement but with some drawbacks. The evidence consistently demonstrates that DTCA acts as an information transmission mechanism, effectively raising public awareness of illnesses, boosting diagnosis rates for conditions, and prompting previously under-treated patients to initiate conversations about treatment options with medical professionals (Peyrot et al., 1998; Donohue et al., 2004; Ventola, 2011; Rosenthal et al., 2002). This contributes significantly to reducing the problem of under-treatment in the marketplace. We also know a lot about the systemic and economic consequences of DTCA.
Furthermore, the content of DTCA is often skewed, highlighting benefits far more prominently than risks, and relying on emotional appeals, which can contribute to widespread public misconceptions about drug effectiveness and safety (Main et al., 2004; Kaphingst et al., 2004; Othman et al., 2009; Bell et al., 1999). However, we don’t have enough universal evidence to definitively say that the benefits outweigh the costs. The ultimate impact of DTCA on social welfare is highly contingent on the regulatory and economic structure of the healthcare system. The combination of high drug prices, excessive marketing expenditures, and generous patient insurance (low copayments) tends to result in a net reduction of social welfare compared to regulation, as needed, of DTCA, prescription drug costs, and patient prescribing habits (Brekke & Kuhn, 2006). Since the trade-off, patient information versus economic inefficiency, is dependent on specific factors like the stringency of price regulation and the increase in generosity of public insurance schemes, a singular, generalizable conclusion regarding DTCA's net benefit cannot be established.
Going forward, further research is needed to compare the actual health benefits of newly advertised drugs, such as gains in longevity and quality of life, against the higher prices and system-wide costs associated with DTCA. Such analyses should incorporate price trends, prescribing patterns, and physician and consumer health outcomes, drawing on comparative evidence from jurisdictions where DTCA is permitted, such as New Zealand, and from comparable countries where it is prohibited, such as Finland. This would allow scholars to assess whether the price is truly worth the public health gain. Research could also investigate how DTCA impacts health and understanding among different groups of people (e.g., those with lower incomes or varying levels of education). This could help DTCA not inadvertently create unfair health disparities. While conducting studies, we need to test new methods, like public service campaigns (maybe paid for by a tax on DTCA), that inform people about diseases and all their treatment options without pushing a specific brand. We can compare these new methods to DTCA to see which one genuinely helps patients the most. Along with the new methods, studies are needed to understand the pressures and reasoning doctors use when a patient asks for a specific advertised drug. This will help us understand why doctors might prescribe a drug even when they think a cheaper or different option might be better. We have data on advertising and effects on pharma market power, but not on DTCA specifically and its effects on pharma market power - there are theoretical papers on these issues, such as Brekke & Kuhn (2006), but as yet no empirical studies.
Based on the evidence showing that DTCA is effective at expanding the pool of treated patients but often at the expense of higher costs and inappropriate use, the following policy changes are recommended. First, regulatory bodies should delay DTCA for any new drug for a fixed period (e.g., 2-3 years). This would allow clinicians to gain experience with the drug, establish its role in therapy, and permit independent research to confirm its clinical value relative to existing treatments, limiting promotion of potentially high-cost, low-value "me-too" drugs (Ventola, 2011). The FDA should require DTCA to include a clear, prominent comparison of the advertised drug's approximate cost and clinical efficacy against the existing generic standard-of-care for that condition. This would combat the promotion of expensive options where a cheaper generic may be medically appropriate (Villanueva et al., 2003). Regulations should also require DTCA to provide more objective, balanced health education, explicitly mentioning modifiable risk factors (i.e., lifestyle choices) and non-pharmacological alternatives (e.g., naturopathy, acupuncture, and physical therapy) alongside drug information. Moreover, ads that rely primarily on emotional appeals should be barred (Frosch et al., 2007). Policy-makers could also consider implementing a progressive tax on DTCA spending, with the resulting revenue earmarked to fund independent, patient-centered drug education and physician-targeted continuing medical education programs to counteract commercial bias.
Conclusion
This review set out to evaluate the overall purpose, impact, and consequences of direct-to-consumer advertising (DTCA) by synthesizing evidence from clinical studies, economic analyses, and previously published content determinations. Across this body of work, the major takeaway is that the DTCA functions as not only a powerful driver of patient engagement but also a significant contributor to social, economic, and informational risks. At a higher level of abstraction, the findings have consistently shown that the DTCA is a strong stimulus for patient action. Research has demonstrated that advertisements substantially increase public awareness of health conditions and encourage patients to speak with physicians about symptoms and treatment options (Peyrot et al., 1998; Dave, 2013), with physicians typically guiding patients toward medically appropriate therapies rather than simply prescribing the requested brand (Gellad & Lyles, 2007). DTCA also contributes modestly to improved treatment adherence (Ventola, 2011) and, contrary to some assumptions, higher advertising intensity is sometimes associated with higher quality drugs (Nagle, 1981; De Frutos, 2013).
However, an equally robust set of evidence highlights some major drawbacks for direct-to-consumer advertising. Such as DTCA playing a measurable role in rising U.S. drug spending, as it went from $53 per person in 1980 up to $831 per person in 2010. This price change is largely because DTCA expands the number of people seeking medication rather than improving quality (Dave, 2013). Standardized patient experiments show that drug requests caused by ads significantly increased the likelihood of receiving prescriptions even when clinical need is uncertain (Kravitz et al., 2005; Ventola, 2011). Content analysis reveals that ads overwhelmingly rely on emotional appeals and emphasize benefits far more than risks (Frosch et al., 2007; Main et al., 2004), contributing to widespread misunderstandings about drug safety and regulation (Bell et al., 1999; Kaphingst et al., 2004; Othman et al., 2009).
The contribution of this paper is to bring these findings together and show that DTCA simultaneously expands access to treatment and exacerbates misinformation, over-treatment, and unnecessary health care expenditure. This dual nature explains much of the ongoing controversy around DTCA’s practice. For producers, the implication is clear: DTCA is highly effective. It reliably increases demand, grows therapeutic markets, strengthens brand recognition, and stimulates patient-doctor dialogue, making it one of the most profitable promotional strategies in the pharmaceutical sector. However, such commercial success reinforces the need for better public policy. To preserve the benefits of early diagnosis and patient engagement while minimizing misinformation and over-treatment, regulators should strengthen pre-approval requirements for advertisements, enforce clearer and more balanced risk communication, and consider delaying DTCA for newly approved drugs. Improved public education about drug regulation and pharmaceutical risks would also help prevent the misconceptions that currently shape consumer demand. With these measures, the potential advantages of DTCA can be sustained without allowing for marketing priorities to overshadow public health.
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