US direct-to-consumer advertisements ‘led to higher drug prices’

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A new study by Dr Michael Law et al. of the University of British Columbia in Vancouver, Canada, published in the Archives of Internal Medicine of 23 November 2009, suggests that US direct-to-consumer advertising (DTCA) for a top-selling drug had no effect on prescribing rates, but led to a major rise in the drug’s price. Use of Bristol-Myers Squibb/sanofi-aventis’ blood-thinner Plavix (clopidogrel), which first appeared on the market in 1998, did not increase as a result of the consumer advertising campaign for it, which began in 2001. However, a “sudden and sustained increase” in the drug’s price after the advertisements commenced cost 27 state Medicaid programmes an additional US$207 million in pharmacy expenditures during 2001–2005, say the authors.


They found that from 2001 to 2005, DTCA spending exceeded US$350 million. DTCA did not change the pre-existing trend in the number of clopidogrel units dispensed per 1000 enrolees (p = .10). However, there was a sudden and sustained increase in cost per unit of US$0.40 after DTCA initiation (95% confidence interval, US$0.31–US$0.49; p < .001), leading to an additional US$40.58 of pharmacy costs per 1000 enrolees per quarter thereafter (95% confidence interval, US$22.61–US$58.56; p < .001). Overall, this change resulted in an additional US$207 million in total pharmacy expenditures.

Dr Law et al. conclude that DTCA was not associated with an increase in clopidogrel use over and above pre-existing trends. However, Medicaid pharmacy expenditures increased substantially after the initiation of DTCA because of a concomitant increase in the cost per unit. If drug price increases after DTCA initiation are common, there are important implications for payers and for policy makers in the US and elsewhere.

“One could surmise that DTCA might lead to increased expenditures via three mechanisms,” noted the authors. These are 1) increased use as a result of marketing directed to patients would lead to increased total pharmacy costs; 2) regardless of increased use itself, pharmaceutical companies might try to offset the expense of DTCA – more than US$5 billion in 2006 – by increasing the price of the advertised drug; 3) if manufacturers expect or receive an expanded indication for a particular product, they may both increase price and initiate DTCA. The authors conclude that future longitudinal studies should examine other drugs and settings, because many other countries are currently considering whether to permit DTCA. Currently, DTCA is permitted only in the US and New Zealand. In comments to Reuters, Dr Law added: “the public should rightly wonder why they’re paying millions in extra drug costs to pay for advertising campaigns that don’t work”.

US drugmakers’ spending for DTCA has increased more than 330% in the last 10 years, and in 2006 the US Government Accountability Office reported that every US$1 spent on DTCA generates an average US$2 in sales. However, in September 2008, the first-ever controlled study into DTCA – whose authors included Dr Law – reported in the British Medical Journal that money spent on such advertising has no effect whatsoever.

Nevertheless, the control or abolition of DTCA has long been a popular target for Congress, and current proposals include House Energy and Commerce Committee Chairman Henry Waxman’s call for the FDA to have powers to ban such advertising for new drugs for up to three years after approval, and New York Representative Jerrold Nalder’s reintroduced ‘Say No to Drug Ads Act’, which would abolish tax exemptions for DTCA.

It is in the first few years of a new drug’s life that manufacturers “often aggressively market their products and engage in DTCA”, and this “increases the number of consumers exposed to safety risks of new products long before they are truly understood,” Representative Waxman has said.

Taylor L. US consumer ads “led to higher drug prices”. PharmaTimes. 2009 Nov 26.

Law MR, Soumerai SB, Adams AS, Majumdar SR. Costs and Consequences of Direct-to-Consumer Advertising for Clopidogrel in Medicaid. Arch Intern Med. 2009;169(21):1969-74.

Mack J. Did State Medicaid Programs Finance Plavix Direct-to-Consumer-Advertising? Pharma Marketing Blog. 2009 Nov 23.

Source: PharmaTimes; Arch Intern Med; Pharma Marketing Blog

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