DTC advertising spending increases

December 1, 2000

Pharmaceutical Representative

Prescription drugs that are heavily advertised to consumers are responsible for the recent rise in pharmaceutical spending in the United States.

Prescription drugs that are heavily advertised to consumers are responsible for the recent rise in pharmaceutical spending in the United States, according to a study by the National Institute for Health Care Management Research and Educational Foundation. Though two recent reports cite increasing volume of prescriptions as a factor in drug spending (see the other story on this page) rather than the increased prices that drug company critics point to, the NIHCM report attributes the increasing volume of prescriptions to increased marketing expenses by drug companies.

The report found that the 25 top-selling medicines promoted to consumers in 1999 accounted for 40.7% - or $7.2 billion - of the overall $17.7 billion increase in retail drug spending in 1999.

The 25 drugs had an aggregate one-year sales growth of 43.2% in 1999. By comparison, the growth in sales for all other drugs was 13.3%. The strong rise in revenues and spending was driven largely by an increase in the volume of prescriptions. Pharmacies dispensed 34.2% more prescriptions in 1999 than in 1998 for the 25 drugs that contributed most to the rise in prescription drug spending.

Spending on mass media advertising for prescription drugs reached $1.8 billion in 1999, up from $375 million in 1995. It continued to accelerate in the first four months of 2000, reaching $946 million for the period, 58% more than the $597 million spent during the same four months in 1999.

"Our results indicate that mass media prescription drug advertising is playing a major role in the rise of prescription drug use and spending," said Nancy Chockley, president of the NIHCM.

Chockley noted that the findings raise many questions. "Among the most important is whether mass media ads for prescription drugs will further push pharmaceutical companies to become marketing powerhouses focused on selling drugs rather than developing truly innovative new ones. If that's the case, it may not be good for consumers."

Proponents of direct-to-consumer advertising argue that the ads have added enormously to the information consumers are getting about prevalent health conditions and diseases and claim that they make people aware of potential treatments and facilitate dialogue between doctors and patients about diseases that are under-treated. PR

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