, Volume 25, Issue 6, pp 511–521 | Cite as

Costs and Benefits of Direct-to-Consumer Advertising

The Case of Depression
  • Adam E. Block
Original Research Article



Direct-to-consumer advertising (DTCA) is legal in the US and New Zealand, but illegal in the rest of the world. Little or no research exists on the social welfare implications of DTCA.


To quantify the total costs and benefits associated with both appropriate and inappropriate care due to DTCA, for the case of depression.


A cost-benefit model was developed using parameter estimates from available survey, epidemiological and experimental data. The model estimates the total benefits and costs (year 2002 values) of new appropriate and inappropriate care stimulated by DTCA for depression. Uncertainty in model parameters is addressed with sensitivity analyses.


This study provides evidence that 94% of new antidepressant use due to DTCA is from non-depressed individuals. However, the average health benefit to each new depressed user is 63-fold greater than the cost per treatment, creating a positive overall social welfare effect; a net benefit of >$US72 million.


This analysis suggests that DTCA may lead to antidepressant treatment in 15-fold as many non-depressed people as depressed people. However, the costs of treating non-depressed people may be vastly outweighed by the much larger benefit accruing to treated depressed individuals. The cost-benefit ratio can be improved through better targeting of advertisements and higher quality treatment of depression.


Paroxetine Physician Visit Antidepressant Treatment Depressed Individual Adjustment Disorder 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



The author thanks Meredith Rosenthal, Joe Newhouse and David Cutler for their support and comments. In addition, thanks to Heidi Williams, Daniel Richenthal, Rena Conti and Erin Strumpf for providing comments on early drafts.

No sources of funding were used to assist in the preparation of this study. The author has no conflicts of interest that are directly relevant to the content of this study.


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Copyright information

© Adis Data Information BV 2007

Authors and Affiliations

  1. 1.Harvard PhD Program in Health PolicyHarvard UniversityCambridgeUSA

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