IPI Publication Press Release
IPI Policy Report - # 155
Related Publication Title:
Who’s Afraid of Pharmaceutical Advertising?
Released by hMerrill Matthews on 06/01/2001
IPI Policy Report - # 155
Related Publication Title:
Who’s Afraid of Pharmaceutical Advertising?
Released by hMerrill Matthews on 06/01/2001
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IPI Center for Technology Freedom
For Release: Tuesday, June 5, 2001
For more information: Sonia Hoffman
(888) 557-4474 or shoffman@ipi.org
Dallas, TX: The pharmaceutical industry is taking heat for prescribing more of their marketing dollars to patients instead of doctors. Critics are concerned that direct-to consumer (DTC) advertising leads to higher prices as companies cover expensive promotional costs.
But according to Dr. Merrill Matthews, Visiting Scholar at the Institute for Policy Innovation (IPI) and author of a new IPI report “Who’s Afraid of Pharmaceutical Advertising?,” it’s not DTC advertising that increases the costs of drugs, it’s the lack of it.
“If marketing expenditures were actually driving up the cost of drugs, you would expect to see a significant increase in total marketing spending since 1997 when the FDA relaxed DTC advertising rules,” says Dr. Matthews. “That didn’t happen. Total marketing expenditures have actually grown at a fairly steady rate since DTC became an option for the pharmaceutical industry.”
While total marketing expenditures are increasing at a constant pace, the allocation of those dollars is changing. In less than a decade, DTC advertising increased from $55 million (1991) to $1.8 billion (1999).
Even so, in 1999 drug companies only spent 13 percent ($1.8. billion) of their marketing dollars on DTC advertising while pouring 87 percent ($12 billion) into professional campaigns, including samples to physicians and advertising in medical-related trade publications.
Does this change in marketing strategy raise the price of the advertised drug?
No. For example, Zyrtec’s and Allegra’s 1999 DTC advertising budgets were $57.1 million and $42.8 million respectively. If there were a direct correlation between advertising expenditure and price, you would expect Zyrtec to be more expensive than Allegra because it is more heavily advertised. That’s not the case.
Continues Matthews: “Critics of DTC pharmaceutical advertising are misguided. The truth is that high prices thrive in an atmosphere of ignorance. If the American people want to see the price of prescription drugs fall, they should encourage more advertising and competition.”
This information is from a new report by the Institute for Policy Innovation entitled “Who’s Afraid of Pharmaceutical Advertising?” by Merrill Matthews, Ph.D. For additional information, visit www.ipi.org or call Sonia Hoffman at (972) 874-5139. The author is available for interview.
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