Rx DRUG INFLATION: Advertising’s Ripple Effect
The popularity of newer, more expensive drugs drove the average price per prescription from $26.61 in 1993 to $37.38 in 1998, the Wall Street Journal reports. And while much of the rise is attributable to much-ballyhooed research and development costs, an even greater cause of inflation is the cost of marketing, according to a draft report from the National Institute for Health Care Management, a not-for-profit research organization funded by the insurance industry and government. The report notes that whereas pharmaceutical companies devoted $17 billion to R&D last year, they spent $8.3 billion on marketing, $1.3 billion of which was spent on direct-to-consumer advertising. This year, industry spending is expected to increase 17% for R&D, and 54% for advertising. The study finds that "four major categories of drugs accounted for 31% of the total $42.7 billion rise in drug costs from 1993 to 1998." These four categories -- oral antihistamines, antidepressants, cholesterol-reducing drugs and anti-ulcer drugs -- include seven of the 10 drugs advertised most heavily to consumers in 1998.
Informing the Medicare Debate?
Industry critics say the findings bolster their position that "pharmaceutical firms can well afford to provide drugs to Medicare ... at reduced prices without jeopardizing research and development." Ron Pollack, executive director of Families USA, said, "Clearly, a lot of drug industry spending goes for matters unrelated to research, like marketing." But officials at the Pharmaceutical Research and Manufacturers of America, who declined to comment on the report until they had seen a draft, have expressed strong concern about Clinton's proposal, noting that "any reduction in price -- through deep discounts or direct controls -- could cripple long-term research" (McGinley, 7/7).