Who’s Afraid of Pharmaceutical Advertising?
by Merrill Matthews on 05/17/2001
18 Pages
Many health policy experts believe that direct-to-consumer (DTC) advertising by pharmaceutical companies misinforms gullible consumers, encourages drug overconsumption, increases health care costs, strains doctor-patient relationships and undermines the quality of patient care.
These concerns largely are misdirected. The U.S. health care system is transitioning from a physician-directed system to a patient-directed one, primarily because of the growing availability of health care information. For example, more than 50 percent of adults who go on the Web use it for health care information. Advertising is only a vehicle for getting information to the intended customers. It tells prospective customers about product availability, quality and cost — the information those prospects need in order to make comparisons. Direct-to-consumer pharmaceutical ads are simply a response to the transitional process, not the cause of it.
Critics contend that DTC advertising is responsible for the high cost of many prescription drugs. But advertising can — and should — lower costs by expanding consumer awareness and increasing sales, lowering the fixed costs per consumer.
In 1999 drug companies spent only 13 percent ($1.8 billion) of their marketing dollars on DTC efforts and 87 percent ($12 billion) on “professional spending” (e.g., contacting doctors and hospitals, and advertising in professional journals). However, while total marketing expenditures have been increasing at a relatively constant pace, the allocation of dollars within the marketing budget is changing. As health care shifts from a physician-directed to a patient-directed system, pharmaceutical companies are changing their marketing focus from doctors to patients. In less than a decade, DTC advertising has increased from $55 million (1991) to $1.8 billion (1999).
The fact is that in a competitive market, drug companies cannot just add on the cost of advertising because they could lose market share. The drug industry is very competitive; no drug company has more than 5 to 6 percent of the worldwide pharmaceutical market. Just consider that among the top 50 prescription drugs advertised DTC in 1999:
- Three (Claritin, Zyrtec and Allegra) were oral antihistamines for allergies.
- Four (Flonase, Nasonex, Flovent and Nasacort) were inhaled respiratory steroids.
- Three (Glucophage, Rezulin and Avandia) were oral diabetes medications.
- Three (Celebrex, Vioxx and Enbrel) were antiarthritic drugs.
As the market for prescription drugs becomes even more competitive, the nature of the advertising will change. Currently none of the drug companies compete on price in their ads, but that too may change.
Consumers appear to like the fact that pharmaceutical companies are reaching out directly to them. And surveys indicate they make use of that information. According to a recent survey by the federal Food and Drug Administration:
- 51 percent of respondents who had seen a doctor in the last three months said that a prescription drug ad caused them to look for more information about the drug.
- And 72 percent rejected the notion that prescription drug advertisements made it seem that a doctor wasn’t needed to decide if a drug was right for them.
Putting information in the hands of consumers who didn’t have that information before is a revolutionary business — and revolutions engender change. Health care spending may go up, but there is nothing wrong with that if people are getting treated for medical conditions that had gone undiagnosed. And increased communication between the physician and patient may enhance the doctor-patient relationship.
As long as patients are insulated from the cost of medical care and doctors stand between patients and their prescriptions, the health care marketplace cannot work exactly like a normal market. But it still can be competitive. Advertising will play a major role in expanding that competition. We have no reason to fear advertising; what we should fear is the people who want to control it.
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