Monday, July 6, 2009

How does direct to consumer advertising affect the cost of medications

When one looks at television, a newspaper or a magazine it is impossible not to be inundated with ads for various prescription drug medications. This was not always the case. In fact, not until 1997, when the FDA issued its guidelines for direct to consumer advertising, did this massive pharmaceutical advertising expenditure begin.

It might interest some to know that only 2 countries in the world allow our brand of direct to consumer advertising of prescription drugs: the United State and New Zealand.

The amounts of money involved are staggering. A study done by the Kaiser Family Foundation in 2006 found that for every dollar a drug company spent on advertising, it earned $4 in additional sales. Doesn’t sound like much, does it?

But the real numbers put the impact in prospective. In 1999, just two years after the FDA permitted direct to consumer advertising in its current form, Pfizer spent 55 million advertising it’s cholesterol lowering drug, Lipitor. Sales of Lipitor jumped 56% that year to almost $2.6 billion.

As advertising spending went up, the amount of control exercised by the FDA fell. According to the New England Journal of Medicine, the FDA sent 142 violations letters to pharmaceutical companies in 1997. By 2006 the FDA sent only 21 violation letters.


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