Ernst R. Berndt

The two components of the advertising industry – the creative sector that develops and produces messages, and the communications sector that transmits messages via various media – have each been greatly affected by advances in creative design and communications technologies. As the media composition of advertising has changed in the last century for both local and national advertising – from newspapers, outdoor and radio advertising to network and cable television, and most recently to internet and digital media – so too has been transformed the very concept of advertising, its functionality and its measurement. We compare four sources of annual nominal U.S. aggregate advertising expenditure data – from the public sector Internal Revenue Service and the U.S. Census Bureau Survey of Service Industries, and the private sector McCann-Erickson and Magna Global advertising agencies – that are available over various time periods. In nominal terms, we estimate the elasticity of advertising expenditures with respect to Gross Domestic Product, and find that this elasticity appears to have increased substantially beginning in the late 1990s – from about 1.4 to 1.9. The timing of this structural break coincides roughly with the decline of print, radio and network and cable television, and the dramatic increase in digital and internet-based advertising. To understand the forces underlying this structural break in nominal advertising expenditures, data on media-specific advertising prices are needed, thereby converting nominal to real advertising. However, currently annual U.S. Bureau of Labor Statistics Producer Price Index data on digital and many other advertising media prices are only available beginning in 2010. The availability of media-specific quality-constant price indexes would not only enable researchers to trace more completely the recent impact of digital and internet advertising, but would also facilitate contemporary and longstanding issues to be addressed surrounding the measurement of advertising effects, including how variations in the durability of response to advertising across media are related to inter-media price differentials, and why heterogeneity among firms and industries may arise with respect to the procyclicality of advertising policies.1

Variability in regulatory frameworks, industrial policy, physician/pharmacy autonomy, brand/generic distinctions, and the practice of medicine contribute to ambiguous interpretations of cross-country pharmaceutical cost comparisons. Here, we report cross-country comparisons that: (i) focus on ten therapeutic classes experiencing patent expiration and loss of exclusivity 2004–2010 in eight industrialized countries; (ii) convert revenues and unit sales to cost per day of treatment and number patient days treated using the World Health Organization’s Defined Daily Dosage metrics; (iii) compare patterns in costs per day of treatment with price index measures based on average price per day of treatment for each molecule computed over all molecule versions; (iv) utilizing econometric methods, model and quantify various factors affecting variations in daily treatment price indexes such as national regulatory and reimbursement policy changes, physician/pharmacy autonomy, and other factors; and (v) simulate changes in expenditures by country and therapeutic class had counterfactual policies been implemented.

Background: Academic medical centers (AMCs) have increasingly adopted conflict of interest policies governing physician-industry relationships; it is unclear how policies impact prescribing. Objectives: To determine whether 9 American Association of Medical Colleges (AAMC)-recommended policies influence psychiatrists’ antipsychotic prescribing and compare prescribing between academic and nonacademic psychiatrists. Research Design: We measured number of prescriptions for 10 heavily promoted and 9 newly introduced/reformulated antipsychotics between 2008 and 2011 among 2464 academic psychiatrists at 101 AMCs and 11,201 nonacademic psychiatrists. We measured AMC compliance with 9 AAMC recommendations. Difference-in-difference analyses compared changes in antipsychotic prescribing between 2008 and 2011 among psychiatrists in AMCs compliant with ≥7/9 recommendations, those whose institutions had lesser compliance, and nonacademic psychiatrists. Results: Ten centers were AAMC compliant in 2008, 30 attained compliance by 2011, and 61 were never compliant. Share of prescriptions for heavily promoted antipsychotics was stable and comparable between academic and nonacademic psychiatrists (63.0%–65.8% in 2008 and 62.7%–64.4% in 2011). Psychiatrists in AAMC-compliant centers were slightly less likely to prescribe these antipsychotics compared with those in never-compliant centers (relative odds ratio, 0.95; 95% CI, 0.94–0.97; PP<0.0001), a relative increase of 1.1% in probability. Conclusions: Psychiatrists exposed to strict conflict of interest policies prescribed heavily promoted antipsychotics at rates similar to academic psychiatrists and nonacademic psychiatrists exposed to less strict or no policies.

A study using a large sample of agreements between sponsors of clinical trials and clinical investigators suggests that it should be feasible for statistical agencies to develop a producer price index for biomedical research-and-development activities.

We address a puzzle surrounding the shift from bundling to unbundling of U.S. advertising agency services and the slow pace of change over several decades. We model an agency’s decision as a tradeoff between the fixed cost to the advertiser of establishing a relationship with an agency and pecuniary economies of scale from media services provision. Using micro-data from the U.S. Census of Services for 1982-2007, we find agencies are more likely to unbundle with increasing size, diversification and higher media prices, and less likely with increasing age, larger media volume, and an interaction between media prices and volume.

We examine market share and price trends in the quarter century since the 1984 Waxman-Hatch legislation. The generic share of US retail prescriptions has grown from 18.6% in 1984 to 74.5% in 2009, with a notable acceleration in recent years. Whereas in 1994 the generic price index fell from 100 to 65 in the 24 months following initial generic entry, in 2009 the comparable price index was 28. For the prescription drugs most commonly used by beneficiaries in Medicare Part D, rather than increasing by 25–28% as has been reported by the American Association of Retired Persons (focusing entirely on brand prices), we find that once one incorporates substitution to lower priced generics following patent expiration, average price per prescription fell by 21.3% from 2006–09. Finally, we find that the weighted mean reduction in pharmaceutical daily treatment cost across nine therapeutic areas equaled 35.1% at 24 months post-generic entry.

(2011). An Overview of Henry Grabowski’s Scholarly Contributions. International Journal of the Economics of Business: Vol. 18, Pharmaceutical Economics: Essays in Honor of Henry G. Grabowski, pp. 151-154.