Study Showing Drug Ads Are Linked to Higher Prices Has Flaws
A new study of direct-to-consumer (DTC) prescription drug advertising says that spending on promotion may be associated with increases in drug prices. The study reopens the debate about whether DTC actually works, and if so whether it affects drug prices. More importantly, the study’s limitations underscores the need for a large, comprehensive study on whether DTC affects drug prices — something that has never been done.
The latest study, published in the Archives of Internal medicine by Michael Law of the University of British Columbia in Canada, looked at Bristol-Myers Squibb (BMY)’s Plavix, a blood thinner:
There was no DTCA for clopidogrel from 1999 to 2000. From 2001 to 2005, U.S. spending on DTCA for clopidogrel exceeded $350 million, an average of $70 million per year.
Clopidogrel use in the 27 Medicaid programs did not change after DTCA. However, cost per unit per quarter increased by $0.40 (12 percent) after DTCA for the drug began, leading to an added $40.58 in pharmacy costs per 1,000 Medicaid enrollees per quarter. “Overall, this change resulted in an additional $207 million in total pharmacy expenditures,” the authors write.
Not everyone buys the idea that $207 million in tax money was wasted because BMS’s ads pushed up the price of Plavix. Internet Drug News pointed out there were lots of price increases across all drug categories in that time period:
This study’s conclusion pivots on the fact that there was a cost increase in Plavix because that’s when certain DTC campaigns started; but it is not beyond the realm of possibility that there are a myriad of reasons Plavix and other drugs were forced to raise prices in 2001.
In fact, a larger study of five drug categories by Villanova School of Business and IMS Health found there was no effect between DTC and drug prices. A Harvard study (also by Law) found that DTC doesn’t even work in terms of spurring demand, as did this anecdotal look. Both those articles only looked at a small group of drugs.
There is only one conclusion to be drawn from all this: Studying one drug, or a small group of drugs, is not good enough if you want to draw conclusions about how DTC affects demand and pricing. There needs to be a study of a large number of well-advertised drugs across several years.
Image: The Nasonex bee, which is to blame for the FDA’s new proposed restrictions on drug ads.
- Related:
- How Drug Advertising Restrictions Could Benefit the Industry
- Sen. Franken Wants to End Tax Deductions on Drug Promotion
- NYT Poll: Everyone Hates Drug Advertising
- Why Schering-Plough’s Nasonex Bee Is to Blame for FDA’s New Drug Ad Rules
- Insomnia and Antidepressant Sales Give Lie to DTC Myths
- PhRMA’s New Drug Ad Rules Still Lack an Enforcement Mechanism
- AZ, Roche and Shire: U.S. DTC Is Awful — Can We Have It in Europe Too?
- Millward Brown Launches Defense of Drug Ad Effectiveness
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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