Direct-to-Consumer Advertisement and Prescription Contraceptive Choices

This paper investigates the impact of direct-to-consumer advertising (DTCA) on womens prescription contraceptive choices using television advertisement data and health insurance claims. I leverage quasi-random variation in exposure to local television advertising to identify the causal effect on womens decisions. The findings indicate that a 10% increase in DTCA for short-term contraceptive methods, such as pills, increases demand for the advertised product by 2.7% and generates positive spillovers to branded and generic products in the same category. At the same time, DTCA for short-term methods reduces demand for long-acting reversible contraceptives (LARCs), such as intrauterine devices (IUDs) and implants. After the Affordable Care Act reduced out-of-pocket costs for prescription contraceptives for insured women, advertising shifted from short-term to long-term methods. The television advertising for permanent methods increased demand for LARCs and decreased demand for short-term products. These results provide new causal evidence on how television advertising influences consumer decisions in a market where patients have wide discretion and products vary by type, cost, and effectiveness.