Risk Assessment: The Consumer as an Intuitive Statistician - Innovation and Marketing in the Pharmaceutical Industry - page 284

10.2 Overview of Managerial Practices

In the last decade, since the Food and Drug Administration relaxed its rules in 1997,
direct to consumer (DTC) advertising for prescription drugs has grown exponen-
tially in the United States (Thomaselli 2006 ). Lexchin et al. ( 2012 ) estimate that in
2012 approximately $5 billion will be spent on DTC advertising. Spending appears
to have leveled out as in 2005 DTC spending was estimated at $4.6 billion, repre-
senting 17 % of total industry promotional spending of $27.2 billion (Manning
2006 ). Pharmaceutical companies are estimated to have spent $4.7 billion in maga-
zine and television advertising in 2008, a 10.7 % drop from 2007, with 15 % of
these sales for drugs that were less than a year old (Swallen 2012 ). Less than a
decade ago, in 2003, the estimated DTC spending of over $3 billion represented
over 1/8th of the overall marketing budget of pharmaceutical companies that year, a
compound increase of more than 30 % per annum since 1997 (Humphreys and
Boersig 2004 ). Longley (2012) reports that the data from the Department of Health
and Human Services suggests that half of the American population takes a prescrip-
tion drug, with one in six taking three or more! Diabetes, cholesterol for heart
disease, and depression are the three biggest health domains.
Advertisements are directed at consumers to help them assess whether they, or
someone they know, are at risk and to encourage them to speak to their doctor about
treatment. The advertisements appear to achieve this goal: In a statement before the
Federal State Commission, Findlay ( 2002 ) reported that more than one in four of
those who had seen a DTC ad talked to their doctor about it, with half of these spe-
cifically asking for a prescription. In the same report, he also states that whereas
prescription for non-advertised drugs rose 4.3 % from 1999 to 2000, those of heav-
ily advertised drugs increased by 24.6 %, a finding consistent with the fact that 78 %
of primary care physicians reported that their patients asked them for drugs that they
had seen advertised on television, with as many as two-thirds of them being pre-
scribed the drug they had enquired about. This explosion of DTC drug advertising
has led government organizations, both in the United States (US General Accounting
Office) and overseas (e.g., Health Action International-Europe), to question its wis-
dom, while pharmaceutical companies have enjoyed record sales and profits.
Claritin, the antihistamine, spent $137 million in 1999 on DTC advertising, and its
sales increased by 21 % to $2.6 billion the following year (Charatan 2000 ).
Self-diagnoses are increasingly being relied upon by pharmaceutical companies
(e.g., Bristol-Myers-Squibb uses two full page advertisements in national magazines
to help consumers recognize whether they have bipolar disorder and informing them
about the drug, Abilify 1 ), health insurance providers (e.g., HealthNet), diagnostic web
sites (e.g., www.WebMD.com ) , drug stores (e.g., Longs Drugs advertises the symp-
toms of depression), consumer welfare groups (e.g., 1-800-Gambler), and public
policy providers to attempt to get people at risk to seek treatment. The surge in DTC
advertising for a range of physical conditions including allergies, premenstrual

1 Pages 15-16 in Newsweek, April 24, 2006.