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How much is that drug ad costing taxpayers?


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

The views expressed are those of the author and are not necessarily those of Scientific American.

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