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5/9/2008
Adam Delikowski: Pharma ad nonsense
It seems that the end-all be-all discussion on the lips of every business person and resident in America, outside of the economy and rising gas prices, is health care. Ironically, I had a bit of a personal epiphany about that during an ad for Levitra®.
Of course, Levitra® was unveiled a few years back in what has to be one of the most enigmatic ad campaigns since the infamous 1984 Apple ad. It featured men throwing footballs through tire hoops (not an innuendo…) and complaining about their quality of life. Never once did the ad actually tell you what Levitra® was for!
This got me to thinking—just how much do pharmaceuticals spend on advertising and this Direct-to-Consumer (DTC) nonsense? It turns out the answer is a lot—more than you might even imagine.
According to a recent study by York University, the industry spends about 25% of its $235.4B (!) on DTC. That is about $60B USD… Even worse: According to the study, that’s DOUBLE what is spent on R&D!
Seriously? Call me naive, but those numbers seem staggering—bordering on audacious. We’re struggling to find a long term solution to health care, when a viable short term solution is right under our noses.
Now, I am by no means saying this is the solution to our problems—it clearly isn’t—but the savings that the end user could gain by pharmaceutical companies eliminating TV, radio, print and other advertising, as well as doctor lobbying could be huge.
PR Watch does a great job of illustrating my point. Medicines have been diluted from a medical necessity to a consumer choice. Rather than focusing on what a patient needs, they are focusing on the fun one could have once you “Viva Viagra!™” This would be a different discussion if the ads in question were informational, rather than purely marketing.
A majority of doctors and a majority of the public indicate that DTC efforts should be restricted, if not banned. Every western nation, with the exception of New Zealand and the United States, heavily restricts—and in some cases bans entirely—pharmaceutical DTC advertising.
I’m not necessarily suggesting we should ban ads all together. (The Freedom of Speech implications would be huge, let alone the other arguments.) However, we must have a salient discussion on the costs and benefits to DTC and the effect it has on our health and our pocketbooks.
Even if you disagree with me about pharma ad spending, do we need ads telling us what medicine we should be putting in our bodies? We need doctors telling us that. I, for one, am not going to randomly ask for a pill that may or may not treat a disease that I may or may not have. I am going to (possibly blindly) trust that my doctor knows what is best for me and will give me options that he/she feels are appropriate.
At least, for the sake of my sanity and the sanity of people everywhere, ban those incipit “Happy Bob” ads for Enzyte with the creepy Andy Griffith whistling. Please?
Adam Delikowski enjoys writing and is the Government Affairs Director at the Valley Home Builders Association.
COMMENTS
Right on. One of the problems with treating health care like a regular business is that to a great degree health care demand is not elastic. By and large, consumers don't go to the doctor just for the heck of it. So, when Livetra competes with Viagara it is doing do in an environment where in theory they are dividing up a static pie of potential users. Having said that I find it hard to believe that the legitimate market for those drugs is so large as to justify all those expenditures. Why aren't there similar ad campaigns for birth control bills. for that matter, why is it that some health insurance companies don't cover birth control pills?
dave allen (Fri May 09 06:13:15 2008)
Now Dave is an expert on the amount of sales these products produce. He doesn't know...just guessing. If a company spends a million dollars advertising a product and it brings in 5 million in product sales with a million dollars in profit....they will continue to do it. Very simple. Supply and demand. Doctors also have to prescibe these products. So, if you have a problem they should be aware. All these advertising dollars are going to many companies who produce jobs. Ad agencies, newspapers, magazines who in turn by insurance, purchase cars, go on vacations, eat food, buy clothes, etc., etc. That's the economy. I don't particularly like these type products mentioned because of the moral problem but they still have the right to market and produce as they see fit. It's their business, not ours.
John Hyland (Fri May 09 07:53:12 2008)
As one who gets his paycheck from advertising revenue, I have to point out a fatal flaw in Adam's logic. It is in this passage:
Now, I am by no means saying this is the solution to our problems—it clearly isn’t—but the savings that the end user could gain by pharmaceutical companies eliminating TV, radio, print and other advertising, as well as doctor lobbying could be huge.
Here's the flaw. Obviously, the big pharma firms spend the huge amounts of money on advertising because they are getting a HUGE return on their investment.
So, the advertising is growing their profits. If you believe removing a tool that grows their profits will mean savings to the consumer, I have a bridge I'd like to sell you.
Jerry Bader (Fri May 09 08:25:18 2008)
It is well known that there is a consumer pull from advertising to doctors. Viagra and similar products have huge demand from people who shouldn't get them but they do anyway, from doctors. Drug companies in the US are very profitable because single purchaser health care does not exist. So companies fight for a piece of the unusually large profit pie via unscrupulous advertising rather than inventing something truly revolutionary and the health insurance companies and consumers pay the freight.
Just because a drug is profitable doesn't mean that the drug is any good or competing in a truly competitive environment. We should have a single national purchasing plan like almost every other western society does then the price would drop and companies wouldn't invent copy cat drugs. They would instead, invest in really new products that with proper patent protection would provide adequate profits. The easy money is made by stealing someone else's market share. That's why copycat drugs exist.
dave allen (Fri May 09 20:14:18 2008)
A national purchasing plan. Do you consider such a "plan" market driven? If so, by what means?
Jo E. (Fri May 09 21:10:21)
Jo, The Federal employees health benefit plan (FEHPB) negotiates drugs and health care on a national basis. Heritage Foundation explains how it is done. Unlike Medicare part D, the FEHPB has large blocks of employees who are overall, represented by FEHBP rules. This gives buying power to the FEHBP and preserves much of the existing infrastructure and choice. Another interesting link about controlling drug prices is here. So, perhaps the FEHBP is a model to use as long as the existing system is in place. But, eventually we cannot afford to have 30% of the health care dollar go to overhead (compared to 10% in most other countries) and to eliminate that 20% waste will mean a national payer system and other national programs. France for example, allows choice but limits reimbursement if the choice is not proven effective. So I see two things that must be done. First, every person must be part of a single large negotiating group and the 30% overhead must be reduced to worldwide standards. I do not believe it is possible to have market based efficient, low cost health care delivery to all citizens (or at least to world standards) unless the market is shaped by these two precursors. Remember that health care is not subject to the usual laws of supply and demand. (neither are roads, the military's role, police, and many other important aspects of our society)
dave allen (Sat May 10 08:48:04 2008)
"To eliminate that 20% (means) a national payer system"--oh really? The Govt usually wastes more than that, so how will giving them entire control of health care help?
When they can balance their books, I'll trust them with more control!
And, just to remind everyone, we DO NOT have a free-market, true supply-and-demand system in the US. When people truly have to PAY for something, it causes true supply and demand. Eg, there are treatments I PAY for, (not covered) that I choose to use because they work
emily matthews (Sat May 10 15:53:54 2008)
Jo, Emily's blanket statement that government is somehow wasteful by definition is simply not true. There are many many examples of government efficiency and (in other countries) their administrative costs for health care are 10% or less compared to the 30% we spend. Part of the problem in the health care debate is that people take idealogical positions rather than factual positions. If there is any study that shows the efficiency of the US health care system overall compared to government run systems please let me know because I'd be interested in taking a look. The deficit spending we have in the US is mostly because we choose to spend money on things that we do not tax ourselves for. We insist here that somehow we know better than every other western country. Why do we still have our heads in the sand?
dave allen (Sat May 10 21:39:31 2008)
Dave, give me an example as to how our govt is NOT wasteful. I think it's pretty wasteful when you have tax-payer funded ER visits for minor ailments simply because people "can't be bothered" (their words) to go to a family dr. or to keep appointments they already had. We HAVE to take them, all because the bleeding-hearts made it so we can't kick time-wasters OUT of ER (as they do in other countries)
EMILY MATTHEWS (Tue May 13 22:07:20 2008)
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