IPI Publication Press Release
IPI Policy Report - # 155
Related Publication Title:
Who’s Afraid of Pharmaceutical Advertising?
Released by Tom Giovanetti on 03/20/2002
IPI Policy Report - # 155
Related Publication Title:
Who’s Afraid of Pharmaceutical Advertising?
Released by Tom Giovanetti on 03/20/2002
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Press Release (03/20/2002)
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Dallas, TX: Drug companies are under fire for advertising their products directly to the consumer rather than just to doctors. Critics argue that direct-to-consumer (DTC) advertising increases drug prices and raises health care costs by encouraging over consumption. But is that the case?
Not really. According to Dr. Merrill Matthews Jr., author of Who’s Afraid of Pharmaceutical Advertising? from the IPI Center for Technology Freedom, there is no reason to fear pharmaceutical advertising. What we should fear are those who want to restrict it.
Increased Costs? Advertising doesn’t increase the cost of a product—it is a fixed cost. No one makes a product without planning to market it. And advertising creates a competitive market which forces drug companies to keep prices lower than they otherwise would in order to gain market share.
For the pharmaceutical industry, the annual growth in marketing dollars has remained relatively consistent, despite the recent influx of DTC ads. What has changed is the focus of marketing dollars from doctors to patients, as the health care industry transitions from a doctor-directed system to a patient-directed one.
“DTC advertising isn’t the cause of this transition,” says Dr. Matthews, “it’s a result of it. Anyone who understands the Wal-Mart model knows that advertising in a competitive market lowers prices, not raises them.” One might question whether Wal-Mart and General Motors, leaders in the anti-drug advertising coalition, would agree that their advertising dollars raise the price of their products.
Over consumption? It’s true that DTC advertising does encourage more drug consumption – which is good, not bad. Drug advertising is information in the hands of consumers. If a doctor feels that a drug is inappropriate for a patient, he doesn’t have to prescribe it. In the long run can lower some health care costs for individual patients when drug therapy precludes the need for other, more expensive therapies.
Government Regulation? Restricting the ability of drug companies to advertise their products would be a catastrophe. If politicians and health policy experts want to ensure that more drugs are available at lower prices, then they should consider policies that encourage advertising and competition.
Continues Dr. Matthews: “Competition and DTC advertising – not government regulation – creates the best possible environment in which consumers can take responsibility for their own health care. Informed patients don’t undermine the doctor-patient relationship, they enhance it.”
This information is abstracted from a study by the Institute for Policy Innovation entitled “Who’s Afraid of Pharmaceutical Advertising?” For additional information, visit www.ipi.org or call Misty Woodruff at (972) 874-5139. The author is available for interview.
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