Direct-to-consumer promotion of prescription drugs. Economic implications for patients, payers and providers

Abstract

Spending on outpatient prescription drugs in the US is accelerating rapidly. Although numerous factors are driving this trend, attention has recently focused on the role played by the marketing, promotion and advertising of pharmaceuticals, in particular direct-to-consumer (DTC) advertising. In 1997, the US Food and Drug Administration (FDA) issued a 'guidance' on such mass media promotion. The guidance altered existing FDA rules and effectively permitted pharmaceutical companies to promote prescription drugs on television and radio without giving detailed or even summary information on indications, efficacy or potential adverse effects. Since then, television commercials, in particular, and print advertisements in consumer magazines and newspapers have proliferated rapidly. Pharmaceutical companies spent $US1.8 billion on DTC advertising in 1999, a 40% increase over 1998. This spending in 1999 was heavily concentrated on about 50 drugs. Evidence is growing that DTC promotion of prescription drugs is: (i) alerting consumers to the existence of new drugs and the conditions they treat; (ii) increasing consumer demand for many drugs; (iii) contributing increasingly to the recent sharp increase in the number of prescriptions being dispensed; (iv) raising sales revenues; and, thus, (v) contributing to the higher pharmaceutical costs of health insurers, government and consumers. The public policy issues surrounding DTC advertisements centre on the following questions: (i) are the advertisements leading to the inappropriate clinical use of some drugs? (ii) are the advertisements inducing both consumers and physicians to choose more costly new brand-name drugs over less expensive, but equally effective, older brand or generic drugs? (iii) do television advertisements for prescription drugs contain a balanced amount of information on benefits versus potential adverse effects? and (iv) will the revenue benefits generated by DTC advertising cause pharmaceutical companies to focus more on developing products to treat prevalent but not life-threatening conditions, such as baldness, sexual dysfunction or memory loss? These questions are just beginning to be probed despite prescription drug spending, insurance coverage and payment policies having become major political issues in the US.