CBO Report Examines Spending on Drug Advertising

 
Last week, the Congressional Budget Office (CBO) released a report titled “Promotional Spending for Prescription Drugs” that analyzes the pharmaceutical industry’s advertising strategies. The report reviews the industry’s promotional activities from 1989 to 2008 for drugs in the classes of medication that include most outpatient drugs produced in tablets or capsules. More than 2000 drugs were included in CBO’s analysis, and companies reported promotional spending for 700–800 of them in any given year.
 
Revised advertising guidelines that the US Food and Drug Administration introduced in the late 1990s spurred direct-to-consumer (DTC) advertising, which has significantly changed the way companies promote their prescription drugs, the report notes. Companies that had marketed largely to physicians and other healthcare providers began buying print and television advertisements in an effort to reach patients.
 
Despite the introduction of a new advertising strategy, total promotional expenditures remained consistent, according to the report. In 2008, promotional expenditures accounted for 10.8% of the US sales reported by the Pharmaceutical Research and Manufacturers of America. During most years since the early 1990s, promotional expenditures have remained at 10–12% of total US sales.
 
Pharmaceutical manufacturers spent roughly $20.5 billion on promotional activities targeted to consumers and physicians in 2008. Companies spent $12 billion, more than half of that promotional spending, on detailing (i.e., sales representatives’ meetings with physicians, nurse practitioners, and physicians’ assistants). The second largest part of the industry’s promotional budgets, $4.7 billion, was allocated to DTC advertising in 2008. Manufacturers spent $3.4 billion to sponsor professional meetings and events, and $0.4 billion to buy advertisements in professional journals.
 
Companies mainly pursued direct-to-consumer advertising for treatments for common conditions that affect a large portion of the population such as high cholesterol, insomnia, or reduced bone density. DTC advertising has also been a popular strategy for drugs with large potential markets that are also approved to treat chronic or long-term conditions. DTC advertising has been less common for drugs that address acute conditions, perhaps because individuals are more likely to seek care for an acute condition or because such drugs are typically prescribed for a short time, according to the report.
 
Although pharmaceutical manufacturers use DTC advertising only for a small group of drugs, they spend a lot on that advertising. The 10 drugs in CBO’s dataset with the highest DTC expenditures in 2008 accounted for 30% of DTC advertising expenditures industrywide. In contrast, the drugs with the highest expenditures on detailing totaled 16% of the industry’s detailing expenditures.
 
When pharmaceutical manufacturers promoted drugs to consumers, they also spent more, on average, promoting those drugs to physicians, according to CBO’s analysis. For drugs with reported spending on DTC advertising, manufacturers spent an average of $40.5 million per drug in 2008 on promotional activities directed to physicians, which is 14 times the average amount they spent when promoting drugs exclusively to physicians. The difference may indicate that manufacturers use promotional activities directed to physicians and DTC advertising to reinforce each other, said the report.
 
The efficacy of drug advertising remains a subject of debate. Studies that analyzed the effects of DTC advertising for various drugs or classes of drugs have shown mixed results, according to the report. The writing and filling of prescriptions increased for some advertised drugs, but not for others. Similarly, some analyses of detailing found positive effects on the number of prescriptions written for the targeted drugs, but others suggest that detailing’s effects are unclear.