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Case Title:

Drug Advertising in the US: Issues and Implications

Publication Year : 2004

Authors: Uma Shanker Shastry, T Phani Madhav

Industry: Health Care

Region:USA

Case Code: MCS001

Teaching Note: Available

Structured Assignment: Available

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Abstract:
Ever since the Food and Drug Administration (FDA) deregulated drug advertising in 1997, American televisions, newspapers and magazines were inundated with numerous direct-to-consumer advertisements. Advertising of prescription drugs suddenly became the fourth largest advertising category in the US; surpassed only by automobiles, restaurants and movies. In 2002, American consumers spent nearly $150 billion on drugs and medication and the figure was projected to touch $254 billion by 2005. Critics, ranging from non-profit organisations to consumers, argued that the deregulation boosted consumer spending on drugs. As a result, the FDA found itself in a difficult position to defend its policy on advertising of drugs. But in February 2004, the FDA took a stricter stance and issued a new set of guidelines to make the drug adverts more consumer-friendly.

Pedagogical Objectives:

  • To discuss the interplay of direct-to-consumer advertising and consumer drug spending
  • To discuss the impact of the FDA's guidelines on the concerned groups.

Keywords : Government and Business Environment Case Study, Drug advertising in the USA, Prescription drugs, Advertising practices, Direct-to-consumer drug advertising, Federal Trade Commission, Patient package insert, Vioxx, Business Environment Case Study, National Institute for Health Care Management, Top DTC (Direct-to-consumer) spenders, Food and Drug Administration (FDA), Deregulation of drug advertising

Contents:

  • Introduction
  • Evolution of Direct-to-Consumer (DTC) advertising
  • 1997 – the shot-in-the-arm
  • The argument
  • FDA's iron fist
  • The side effects

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