Promotional Spending for Prescription Drugs (PDF; 591 KB)
Source: Congressional Budget Office
From CBO Director’s Blog:

Pharmaceutical companies’ efforts to promote prescription drugs have attracted the attention of policymakers because such activities may affect the rate at which different drugs are prescribed and consumed, the total amount spent on health care, and, ultimately, health outcomes. Yesterday CBO released a brief highlighting trends in promotional spending for prescription drugs and market characteristics that influence promotional strategies. CBO examined data on promotional strategies from 1989 to 2008 for drugs in the classes of medication that include most outpatient drugs that were produced in tablets or capsules and were among the top-selling drugs in 2003. Of the more than 2,000 drugs in CBO’s data set, 700 to 800 have some promotional spending reported in any given year.

The way that pharmaceutical manufacturers promote prescription drugs has changed significantly in the past decade. Until the late 1990s, pharmaceutical manufacturers confined their marketing efforts largely to physicians and other health care providers. In the late 1990s, the Food and Drug Administration changed its advertising guidelines and drugmakers began marketing directly to consumers—a practice known as direct-to-consumer (DTC) advertising. Since then, the manufacturers of many prescription drugs have increased their purchases of air time on television and of advertising space in newspapers and magazines.

Recognizing that both consumers and physicians take part in the decision to purchase a drug, pharmaceutical manufacturers spent at least $20.5 billion on promotional activities aimed at those groups in 2008. For a practice called detailing, which involves sales representatives meeting with physicians, nurse practitioners, and physicians’ assistants, pharmaceutical companies spent $12 billion, accounting for more than half of that promotional spending. Companies spent another $3.4 billion sponsoring professional meetings and events and about $0.4 billion placing advertisements in professional journals. Pharmaceutical manufacturers spent the rest of their promotional budgets, $4.7 billion in 2008, on DTC advertising. To place those figures in context, in 2008, promotional expenditures equaled 10.8 percent of the U.S. sales reported by the Pharmaceutical Research and Manufacturers of America, in line with most years since the early 1990s, during which time that share has remained between 10 percent and 12 percent.

This entry was posted on Thursday, December 3rd, 2009 at 7:35 pm and is filed under Business and economics, Consumer issues, Health and healthcare, Prescription drugs. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.