LDI Research Seminar Series

Donald Kenkel
Professor, Policy Analysis and Management
Cornell University

"Advertising, Regulations, and Smoking: The Case of Smoking Cessation Products"

April 25, 2003
12:00 - 1:30 PM
Colonial Penn Center Auditorium

Cigarette industry advertising and anti-smoking public service counter-advertising are familiar features of the U.S. mass media. A large body of research investigates cigarette advertising and the impact of cigarette advertising regulations and bans. A similarly large body of research addresses the design and impact of public service anti-smoking campaigns.

In contrast to the intense focus on these other types of advertising, direct to consumer (DTC) advertising of smoking cessation pharmaceutical products has been almost overlooked. The central aim of our research is to describe and investigate the market for producer-provided information through DTC advertising of smoking cessation products. We document the trends in smoking cessation product DTC advertising expenditures from the 1980s to the present. Our period of analysis begins when the first nicotine replacement product was introduced, and covers the evolution of the market as new products are introduced while some of the older products move from prescription to over-the-counter status. For context, we also document the trends in the cost of advertising, as well as trends in cigarette industry advertising and public expenditures on tobacco control.

Next, we explore the role regulations play in this market. The Food and Drug Administration (FDA) not only regulates the products, but also regulates advertising of the products. This analysis brings us center stage in the ongoing debate about the appropriateness of FDA regulation of DTC advertising of prescription drugs. We focus on two key changes in regulatory policy: the change around 1997 in the requirements for disclosure of side-effects; and the re-classification of smoking cessation products from prescription-only status to over-the-counter status, which in turn also changes the regulatory requirements for disclosure. We conduct parallel econometric analyses of advertising expenditures data and preliminary data from an archive of DTC print media advertisements. When completed, this archive will contain every smoking cessation product advertisement, cigarette advertisement, and public service advertisement that appeared in approximately 12,0000 issues of over two dozen magazine titles spanning the years 1985-2002. The magazine titles in the archive account for more than 75 percent of readership across all magazines. In this paper we use preliminary data from over 3,000 issues of 10 magazines. We use these data and the advertising expenditure data to estimate the extent to which advertising of smoking cessation products responds to FDA regulatory changes. We also estimate the impact of standard economic forces, including advertising costs and market competition.

As a case study, our analysis of the advertising of smoking cessation products sheds light on more general issues related to DTC advertising. Advertising smoking cessation products has the potential to achieve some of the same public health goals as public service anti-smoking campaigns. Yet in certain ways, notably the FDA disclosure requirements, it is more difficult and costly to advertise smoking cessation products than it is to advertise cigarettes. Our analysis suggests that rather than a "one size fits all" policy towards DTC advertising, the debate should consider more fine-tuned policies that weigh the benefits and costs of specific DTC advertising.

Don Kenkel is a Professor in the Department of Policy Analysis and Management at Cornell University. His research focuses on the economics of health promotion and disease prevention. For the past decade he has conducted a series of studies on economics aspects of alcohol policies, for example alcohol taxes and other policies to prevent alcohol problems (Journal of Law and Economics 1993, Journal of Health Economics 1993, Economic Inquiry 1996, Journal of Applied Econometrics 2001). More recent research explores the impact of higher taxes on youth smoking (Journal of Political Economy 2002) and adult smoking cessation. Another area of research and teaching interest is in cost-benefit analysis of public policies that affect health. He received his Ph.D. in Economics from the University of Chicago.

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