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How much is that drug ad costing taxpayers?


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direct to consumer prescription drug adConsumer advertisements for at least one popular prescription drug have failed to stimulate increased sales among those on Medicaid, but the ads do seem to have upped the medicine’s price tag, a new study claims, raising policy questions about the direct-to-consumer marketing approach.

The research found that running direct-to-consumer ads for Plavix (clopidogrel), a popular clot-inhibiting agent, did not jumpstart more rapid dispersal of the drug but did increase its price—passing along higher costs to drug assistance programs, such as taxpayer-funded Medicaid. The results were published online November 23 in the Archives of Internal Medicine.

Direct-to-consumer advertising for prescription medications began in the U.S. in 1997. In its first decade, spending on this sort of marketing reached some $5 billion a year. How do drug companies foot this hefty bill? "To recoup the substantial costs of [direct-to-consumer advertising], firms must generate higher revenues through increased sales, higher prices or both," wrote the authors of the paper, which was led by Michael Law of the Centre for Health Services and Policy Research at the University of British Columbia. The researchers sampled data from 27 states’ Medicaid programs to examine the use and cost of the drug.

Their study drug, Plavix, was on the market for three years before the makers started direct-to-consumer advertising in 2001. Even as consumer advertising for the drug cost more than $350 million nationwide between 2001 and 2005, the rate of its usage did not change among Medicaid enrollees (increasing steadily at the same pace both before and after the ads were rolled out). The medication’s cost, however, did increase, tacking on an additional $207 million in Medicaid payments to pharmacies for the medication in the analyzed states. And as the authors noted, because of low or non-existent copays, "any increase in price would not be passed on to enrollees but would be borne by the payer."

The paper authors do note that their correlations are based on previous data and analysis, but because drug company pricing data are confidential, other market factors might have come into play.

Earlier this year, members of the House of Representatives sponsored a bill that sought to ban some television ads, particularly those that are for so-called lifestyle drugs, such as erectile dysfunction or thin eyelashes. "You should not be diagnosed by some pitchman on TV who doesn’t know you, Jerrold Nadler (D-NY), who introduced a different bill that would disallow drug companies from deducting advertising costs from their taxes, told The New York Times in July. "They should not be able to get taxpayers to subsidize it," he said.

The authors of the paper wrote that despite the long-term concern over the issue of direct consumer advertising, there should be more research to confirm that the findings on Plavix pertain to other drugs as well. "If drug price increases after [direct-to-consumer advertising] initiation are common, there are important implications for payers and policy makers in the United States and elsewhere."

Image courtesy of iStockphoto/nyul





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  1. 1. rnmisrahi 5:59 pm 11/23/2009

    Who benefits from expensive commercials where the consumer is presented options that he can find on Internet if interested or discuss with his doctor without the commercial bias of TV?
    This insane 1997 bill is one of the reasons we now pend over 16% of our GDP in health care!

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  2. 2. Bops 7:44 pm 11/23/2009

    Drugs…what about advertising in general. When your product is junk, resort to stupid advertising.
    Sell junk, get tax credit. After 26 years in advertising, I have met too many that are crazy, dishonest, greedy, and narcissistic bullies.

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  3. 3. rnmisrahi 8:02 pm 11/23/2009

    The difference is that the advertisers pay for it. If you don’t like Honda, buy Ford or Hyundai… or nothing. You’re the best decision maker.
    But if you need a prescription, your doctor is the best decision maker. If you feel you can argue with him, get info from a reliable source. Doctors are tired of patients asking about miracle TV drugs. Pushing drugs to patients is like asking you to decide which operations research algorithm should be used to direct traffic in your neighborhood.

    You and I end up paying for that, because the consumer doesn’t have an option, particularly if it’s a Medicaid consumer.

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  4. 4. dbtinc 8:18 am 11/24/2009

    hmmm, how many wives of the ED’ers have pushed their husbands to the doc as a result of those ads? Sometimes you have to trust your own instincts as not all docs are as qualified as you may think.

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  5. 5. Soccerdad 9:01 am 11/24/2009

    What’s wrong with giving consumers the information and the choice. We should not be solely dependant upon doctors for information. One needs to collect information on their own, and commercials are one means of finding out things you may not have known about.

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  6. 6. Soccerdad 9:19 am 11/24/2009

    There is something wrong about the study or the reporting of the study. I can only access the abstract, but here’s what it claims:

    The additional cost experienced by Medicaid was $40.58 per 1000 enrollees per quarter, leading to additional "total pharmacy expenditures" of $207 million (not clear on whether 1 year or 5 years. Use 5 years to give benefit of doubt). The abstract is not clear on whether the additional "total pharmacy expenditure" was for Medicaid alone or for the US as a whole. The article above clearly claims that this is additional Medicaid spending. If you do the math, you would find that there are 250 million Medicaid recipients based on these numbers and assuming the $207 million is Medicaid only (1.3 billion if you assume the $207MM is an annual total). Obviously this overstates the number of Medicaid recipients by a couple hundred million. Perhaps the number was actually total additional pharmacy cost for the entire US adult population. This would make more sense. But then, the additional $207 million increase seems insignificant for a drug with about $6 billion in sales (about 3%). This seems like a modest annual increase, and not worthy of suspicion.

    I’m sure they wouldn’t be intentionally leaving these numbers open to inerpretation or misrepresenting them so as to influence the current debate. Likewise, I’m sure that SciAm wouldn’t be misrepresenting the study. Science is always pure, right? The numbers don’t lie.

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  7. 7. rnmisrahi 2:32 pm 11/24/2009

    I agree, doctors are far from perfect, but I rather get my information from sources that don’t have a financial interest.
    And yes, doctors often have a financial interest -and hence the need to regulate their investments in pharmaceuticals and the gifts they receive from them- but we have other unbiased sources of information that don’t increase the cost of whatever we’ll end up buying.
    All these commercials don’t add any value to their products and I suspect they are not intended to increase our awareness on our health more than they are interested in our pockets.

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  8. 8. bongobimbo 5:07 pm 11/24/2009

    BEWARD PLAVIX!!! I had an angina attack 2 years ago and the cardiologist put me on Plavix plus baby aspirin (81). I was supposed to take them forever–and I hated it. The slightest nick or hangnail bled for an hour. In December 2008, carrying a load of clothes to be washed, I fell backward down a long flight of steps, and at the last instant of the fall, as I was being grateful that I wasn’t badly injured, my head tapped the door. It didn’t seem like much and there was barely a bump. I was far more worried about striking my sacrum, right next to the backbone, on the lowest step. That hurt a little and I considered a possible minor fracture, so a friend took me to the nearest hospital. The hip and back were fine–but the first CT scan revealed a subdural brain hemorrhage. Nothing but a tap, no symptoms like dizziness, not even a headache, and the bump was gone in two days–but lots of blood on the brain, and it spread for the next 3 weeks. I had to go for several more scans conducted by a brain surgeon, and had to talk him out of doing surgery until, finally, the blood went away in February. When I gave the brain doctor my medications list, he started yelling, "Not Plavix again!" and said that Plavix plus baby aspirin were more dangerous than Coumadin. Yet Coumadin was continually monitored and discontinued as soon as possible, while Plavix was not monitored and was to be taken forever, in the combination my heart doctor knew about. The brain surgeon ordered me immediately off Plavix, while continuing the aspirin. I stopped taking Plavix nearly a year ago and seem to be fine for a woman of nearly 74. Folks–it’s a dangerous drug. The pharm hucksters are doing another infernal sales scam, and will continue to do so until we get Medicare for all with ceilings on pharm price hikes and open competition with Canadian and European meds. But I’m glad I won’t get caught in the price hike since I’ll never take that poison again.

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