Public Employee Press
Advertising: The Drug Industry Con Game
The following is an excerpt from a CBS News/Moneywatch report, March 11, 2016, www.cbsnews.com:
The pharmaceutical industry now spends $5.2 billion annually to advertise its products. With that figure jumping 60 percent during just the last four years, critics are increasingly asking how the boom in pharmaceutical ads may be affecting consumers and the costs they pay for medication.
The issue is also attracting attention from lawmakers and health professionals.
In November 2015, the American Medical Association took the unusual step of calling for a ban on pharmaceutical ads. The reason? Doctors believe the surge in drug ads is prompting consumers to demand expensive medications they might not need.
The debate over pharmaceutical advertising comes at a time when Americans are spending more than ever on prescription medication.
About 20 brand-name prescription drugs have at least quadrupled their prices since 2014, while another 60 medications have doubled in the same time.
Drugmakers, including Pfizer and Allergan, hiked prices in January 2016, boosting some list prices by as much as 42.3 percent. Of course, the most infamous of all came in 2015, when pharmaceutical CEO Martin Shkreli raised the price of a six-decade-old drug from $13.50 to $750. He claimed he needed to boost the price to bring in new revenue for drug development.
Yet nine out of 10 of the biggest pharmaceutical companies actually spend more on advertising than on research and development, according to The Washington Post.
Sixteen drugs accounted for more than $100 million each in spending last year, with the most advertised drug being arthritis treatment Humira, at $357 million.
Among the most-advertised drug is Jublia, a toe-fungus treatment that costs about $600 a bottle but is proven to work in fewer than 20 percent of users, according to Consumer Reports.
The United States and New Zealand are the only countries that allow pharmaceutical companies to market directly to consumers. Unfortunately for Americans, that doesn’t appear to be helping health outcomes or spending. The United States spends more of its GDP on health care than 12 other developed nations.
The Big Pharma Colossus
- Nearly 70 percent of Americans are on at least one prescription drug, according to the Mayo Clinic.
- In recent years, drug manufacturers raised prices by 12 percent a year – significantly higher than inflation.
- The markup of Xanax is 569,958 percent (cacare.com). Consumers pay nearly $140 for 100 mg tablets, whose ingredient cost is $0.024.
- One in four seniors skip doses to reduce the cost of their medication (Business2Community).
- The heath sector, including the drug industry, contributed $55.7 million to politicians in the 2016 federal election cycle, according to the Center for Responsive Politics. Sixty percent went to Republicans and 40 percent went to Democrats.
- The drug industry spent $5.2 billion on advertising in in 2015 (Nielsen).
