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The Pulse of the Pharmaceutical Industry
The criticisms of direct-to-consumer (DTC) drug advertising by policy makers and organized medicine are becoming so common that you may have missed the latest statements by the American College of Physicians (ACP). As is typical these days, an ACP position paper on the cost of prescription drugs focused primarily on the politically popular issues of drug prices, set down its opinion on the matter, and in the process took a swipe at DTC ads.
The ACP says in its paper that “the practice of DTC advertising for prescription drugs is concerning,” and that the group of 143,000 physicians “believes that DTC is inappropriate because it may undermine the patient-physician relationship and foster confusion.”
These are potent words in this political season. Although no one expects Congress to act on DTC advertising while Republicans control the Congress, the election is looming and a new Congress could well review this issue, especially if the Democrats win the White House and both the Senate and the House of Representatives. No one would have expected that just a few months ago, but the rising possibility of a presidential contest between Donald Trump and Hillary Clinton has prompted many inside the beltway analysts to suggest just that.
ACP’s paper, published March 29 in the Annals of Internal Medicine and entitled “Stemming the Escalating Cost of Prescription Drugs,” charges that in the absence of a ban on DTC advertising, which was recommended recently by the American Medical Association (AMA), “ACP supports broad efforts by federal regulators to ensure that information about a drug’s effectiveness and safety, and about alternative treatments, is clearly disclosed to patients.”
While full disclosure is a fine concept, current FDA requirements on contraindications and side effects make a mockery of the idea. Indeed, even FDA is concerned that the current disclaimers are counterproductive and is fielding a major research study to learn more.
What ACP absolutely ignores is the First Amendment. As a matter of Constitutional law, bans on true and non-misleading communication violate the First Amendment and rules that unduly burden that First Amendment right cannot be imposed by government. That’s not only the law; it also makes good public policy sense. The best, most compliant patients are those that are empowered by information on the value and effectiveness of their drugs.
ACP and AMA and other critics do not seem to recognize is that in numerous ways, DTC ads actually help to improve the patient-physician relationship because the ads often get patients talking to their doctors about conditions – many of which are underdiagnosed and undertreated – that they have seen or heard about in DTC ads. And, to the ACP’s point about both the effectiveness and safety of treatments and alternative treatments, the duty to interpret and relay that information has and will continue to fall on the physician, who ultimately is the individual writing prescriptions for patients.
The ACP also repeats an old, and untrue, assertion that “many of the largest pharmaceutical companies are spending more on marketing and administration than they are on research and development.” However, the Pharmaceutical Research and Manufacturers of America (PhRMA) counters that the biopharmaceutical sector is the single largest funder of business R&D in the United States, and that biopharmaceutical companies invested more than 12 times the amount of R&D per employee than manufacturing industries overall between 2000 and 2010.
Furthermore, while the industry commitment to research and development is often underappreciated, the costs of marketing often are way over-reported. One of the most significant cases of over-reporting of expenditures comes with the annual spending reports on DTC broadcast advertising. According to the latest report available, in 2015 $3.7 billion was spent on television ads for drugs. However, that number is an estimate based on the number of ads run at retail, or rate card, cost, not the amount that is actually paid. Researchers at advertising media buying companies project that the reported estimates overstate the actual expenditures by at least 30 percent to as much as 50 percent.
Economists also believe biopharmaceutical health care communication costs are overstated on other important ways. Claims about the amount of spending on marketing often incorrectly categorize all selling, general and administrative expenses (SG&A) (marketing and non-marketing costs) in estimates of “marketing costs,” resulting in an overstatement of marketing costs. The SG&A expenses normally include a range of items such as salaries, pension costs, facility costs, travel expenses, office furniture and supply costs, fees paid for legal work, audit costs, repairs of equipment, postage and printing costs etc.
According to Princeton University professor Uwe Reinhardt, “…the [selling, general, and administrative] category represents many expenses other than selling expenses and should not be seen as an estimate purely of outlays on marketing, as the industry’s critics occasionally do.”
PhRMA also said in a statement that the ACP’s recommendations “are driven by the false notion that spending on medicines is fueling overall healthcare cost growth and ignores how the competitive marketplace for medicines helps keep spending in check.”
“Discussions about the cost and affordability of medicines – and healthcare more broadly – are important, but we need to concentrate on pragmatic proposals that increase competition, modernize the FDA, remove barriers that limit paying for value, address market distorting programs like 340B, and empower and engage consumers with information to make better informed health care decisions,” stated PhRMA. “If we focus on these issues, we can enhance the private market and improve patient access to high-quality, patient-centered care.”
Further, often left out of this debate is the positive impact of healthcare communication efforts. Patients are better served when they and their healthcare professionals have the most accurate and up-to-date medical information. Companies engage with physicians to keep them current on new indications for approved medicines, potential side effects of medicines, and both the emerging benefits and risks of medicines. A survey by Prevention Magazine found more than 70 percent of patients agree that DTC advertising allows them to be more involved with their healthcare and is useful in conveying information about new treatments.
Stay tuned. Medical marketing – especially direct-to-consumer advertising – is a politically hot issue these days and the elections are drawing near.
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