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Smart Thinking blog

Insights and expert advice on the key issues facing today’s pharma marketer

The tribe has spoken

Who gets to decide which profit margin is acceptable?

The tribe has spoken

Reality TV has given us countless catchphrases and memorable pop culture idioms and Jeff Probst's final words to the ousted Survivor competitors - “the tribe has spoken, it's time for you to do” – are well-known.

A few weeks ago the American Medical Association (AMA) took an historic vote in favour of a ban on all direct-to-consumer advertising of drugs and medical devices. Forget, for a moment, about whether this impinges on any freedom of speech rights. Forget, for a moment, about the fact that for this to happen it needs to be enshrined into law by the US Congress. Forget, for a moment, about both the untreated and undertreated patients who may recognise symptoms or latent issues that they now feel may be worthy of discussion with their clinician. Forget about the fact that prescription drug advertising has remained relatively stable over the past five years, that only a handful of drugs are really advertised and that DTC spending is a veritable fraction of the total marketing spend for any of these drugs. And forget about the fact that providers have been advertising their own services for years to the general public with the same potential to drive over-utilisation, misinformation and higher system costs.

How ads affect patient decisions
Let's actually look at the AMA press release to understand the organisation's position. The release states that 'a growing proliferation of ads is driving demand for expensive treatments despite the clinical effectiveness of less costly alternatives.' This is true. There is plenty of data that shows a correlation between DTC advertising and a corresponding rise in prescriptions for that same drug or drug class. However, the notion that somehow patients are walking into doctors' offices and selecting or demanding more expensive treatment options in favour of less costly alternatives is confusing. Isn't that the role of the physician? Isn't part of the physician's job to appropriately counsel patients on the treatment option that is best for them and their disease state?

Are ads fueling a drug price rise? 
The release goes on to stress that the vote taken reflects 'concerns among physicians about the negative impact of commercially-driven promotions, and the role that marketing costs play in fueling escalating drug prices'. Given that total healthcare spending in the US in 2013 was about 3.0 trillion dollars and that the percentage of national health expenditures for prescription drugs in the same year was 9.3%, we're really talking about a small number here that is supposedly fuelling these escalating drug prices. And let's not forget that the presupposition here is that the entire $4bn spent on DTC advertising would be ploughed back into price reductions on drugs. Most healthcare experts would agree that drug manufacturers would simply re-allocate their DTC budgets to another area of their promotional budgets (ie more representatives, more samples, more CME programmes, etc), thereby negating any supposed price reductions to the drugs themselves.

Other factors influencing drug prices
Then the press release talks about 'coverage limitations by the patient's health plan', 'anticompetitive behaviour through the manipulation of patent protection and abuse of regulatory exclusivity incentives' and the monitoring of 'pharmaceutical company mergers and acquisitions, as well as the impact of such actions on drug prices'. Huh? Whether all this is in the purview of the AMA is not in question. Whether this ought to be juxtaposed into a press release and position statement on the ban of DTC advertising is.

It's one thing to call for a ban on DTC advertising and cite the detrimental aspects of DTC advertising such as increased and unnecessary utilisation of new, expensive drugs (as discussed earlier in this column) or the time required to deal with these patient inquiries which may take valuable resources away from both providers and other patients who have established diseases that requires attention but it's quite another to throw the entire kitchen sink at DTC advertising.

Report on risks and benefits
ISPOR's Direct to Consumer Advertisements Working Group published a report entitled 'Risks and Benefits of Direct to Consumer Advertising on Patient-Provider Relationships'. Certainly, this literature review doesn't address the AMA concerns directly and in their entirety and it has its obvious limitations but the ISPOR report does validate both the pros and cons of DTC advertising that have been cited elsewhere and points to a growing 'policy concern' about DTC advertising that ought to continue to be investigated.

In the end, I'm not convinced that the recent AMA vote to ban DTC advertising for drugs and medical devices is entirely clear in its rationale. And that's really the point. If the group representing the 'doctors of America' can't make their position clear, then maybe they're not really sure what the total impact is of DTC advertising.

Article by
Rohit Khanna

20th February 2016

From: Sales



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