Another day has gone by without the CBO producing a "score" of the revised bill. Until it does, the Senate is unable to proceed on scheduling the first of several procedural votes needed to get the bill passed before Christmas. But, I did find a fascinating CBO report on promotional spending on prescription drugs. The CBO director's blog summarizes the highlights. Among the key findings: in 2008, spending on detailing to physicians was by far the biggest outlay of funds ($12 billion); followed in order by direct-to-consumer advertising ($4.7 billion); sponsorships of meetings and events ($3.4 billion); and advertisements in professional journals ($0.4 billion). Total 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."
Also of interest, according to the full report:
* The growth of pharmaceutical manufacturers' overall promotional spending has slowed from a double-digit annual pace in 2003 and 2004 to a rate that is close to zero. That slowdown is probably related, at least in part, to the decline in the number of new drugs that have received FDA approval since 2000.
* In the second half of the 1990s, the FDA approved an unusually large number of drugs, some of which were the first on the market to treat certain conditions and a number of which treat widespread conditions. Not only are fewer new drugs being approved of late, but more drugs also face competition from generic versions. Those factors may be particularly important in explaining declining spending on DTC advertising, which peaked at $5.2 billion in 2006, because pharmaceutical manufacturers tend to use more DTC advertising for drugs that have especially broad potential markets, drugs with few or no substitutes, or drugs with some combination of those characteristics.
* Of the more than 2,000 drugs included in CBO's data set, 700 to 800 have some promotional spending reported in any given year. For nearly all of those drugs, some spending on detailing was recorded. However, manufacturers purchased DTC advertisements for fewer than 100 of those drugs in each of the years since 1995, the year the data set begins to encompass DTC advertising, making DTC advertising the least frequently used form of drug promotion . . . . Journal ads and professional meetings are used to promote fewer drugs than detailing but more drugs than DTC advertising.
As someone who watches a lot of sports broadcasts -- and with them, way too may ads for ED -- I was frankly surprised that DTC is "the least frequently used form of drug promotion." Most of the money is still being spent the way it always has: to influence physicians and clinicians to prescribe a particular drug product.
The CBO reports a relationship between promotion to physicians and advertising to consumers: "When pharmaceutical manufacturers promoted drugs to consumers, they also spent more, on average, promoting those drugs to physicians. For those drugs in CBO's data set with reported spending on DTC advertising, their manufacturers spent an average of $40.5 million per drug in 2008 on promotional activities directed to physicians -- 14 times the average amount they spent when promoting drugs exclusively to physicians That difference may indicate that manufacturers use promotional activities directed to physicians and DTC advertising to reinforce each other."
The relationship between money spent to persuade consumers to ask for new drugs, and for doctors to prescribe them, will continue to be scrutinized by policymakers. (For relevant ACP policy, see our policy paper on direct-to-consumer advertising and our ethics resources about physician industry relations.) The CBO report makes an important contribution in increasing understanding of how and why the dollars flow where they do.
Today's questions. Why do you think drug companies still spend most of the money on promoting their products directly to physicians? What are your own policies on engaging with drug company sales persons?