PHARMACEUTICALS: Direct-To-Consumer Ads Cause Prices To Soar
Today's San Francisco Chronicle takes a look at the "rising flood of ads for products once touted almost exclusively in the gray pages of medical journals." According to the Plymouth Group, direct-to-consumer advertising of pharmaceuticals totaled $1 billion in 1997 -- a 40% jump over 1996 -- and is expected to hit $1.6 billion in 1998. Last year, drug manufacturers spend "triple the amount" on direct-to-consumer advertising than they did on professional advertising. The ads are designed to "lure into a doctor's office people who might otherwise just suffer or else rely on sporadic treatment with over-the-counter pills." Among the most successful drugs because of this technique is Schering-Plough's Claritin, which saw sales jump by 40% after a television advertising campaign was launched.
The increase in direct-to-consumer marketing of prescription drugs is being cited for "a surge in pharmaceutical sales -- and a big jump in costs for managed care companies." Last year, U.S. sales of pharmaceutical products increased 11.4% over 1996, "the second year in a row of double-digit increases." Myra Snyder, executive director of the California Association of Health Plans, said, "Drugs are the No. 1 source of inflation now in health care." The Chronicle reports analysts are saying that "[i]f the trend continues ... consumers eventually may be asked to pay more of the bill, either in the form of higher co-payments ... or annual caps on pharmacy benefits." Among the "first to feel the pinch" may be seniors who enrolled in HMOs because of the attractive drug benefits. A spokesperson for the American Association of Retired Persons said "there's a lot of speculation" that HMOs are going to start scaling back these benefits. However, the Chronicle reports the increasing use of pharmaceuticals could result in decreased health care cost in the long run if "it translates into improved health" (Hall, 3/12).