CDMi Perspectives: DTC in the Crosshairs

DTC is under attack again

Recently, The New York Times Sunday Review ran a cover story entitled “Your cure: How advertising promotes expensive drugs and treatments you may not need.”[1] This came right on the heels of a new bill introduced by Rep. Rosa DeLauro (D-Conn.), which seeks to ban direct-to-consumer (DTC) ads for the first three years after approval of the drug by the Food and Drug Administration (FDA).

This recent wave of targeting DTC started back in November 2015 when the American Medical Association (AMA) adopted a new policy “aimed at driving solutions to make prescription drugs more affordable.”[2] As evidence, they cited the Kaiser Health Tracking Poll: October 2015, which found that the high cost of prescription drugs remains the public’s top health care priority.[3] The AMA expressed concerns that “a growing proliferation of ads is driving demand for expensive treatments despite the clinical effectiveness of less costly alternatives.”[2]

The AMA’s specific areas of focus are:[2]

• Physician concerns about the negative impact of DTC ads
• The role that marketing costs play in fueling drug prices
• The idea that DTC may inflate demand for newer or more expensive drugs, even when they may not be appropriate

The AMA fears that this commercialization is driving the cost of prescription medicines, leading to coverage limitations, and “in a worst-case scenario, patients forego necessary treatments when drugs are too expensive.”[2]

The fuzzy connection between ad dollars and drug cost

According to Kantar Media, the advertising spend by US drug makers has increased by 32% since 2013 to $5.6 billion.[4] Prices of generic and brand-name prescription drugs have steadily risen and experienced a 4.7% year-over-year spike as of August 2015.[5]

Data from Altarum and Kantar suggest there is a potential correlation between the increase in DTC spending and the rising cost of drugs. However, these were two separate studies. There is no clear causal connection or solid proof that the spend on DTC raises drug prices. In fact, significant anecdotal data suggest they are not connected. In 2013, 27% of generic drugs experienced a price increase.[6] The majority of generics are not supported by DTC or marketed by manufacturers of branded therapies.

The other side of the coin

The same Kaiser poll that instigated the AMA’s new focus also contains a number of data points that support continued use of DTC:[3]

1. A large majority of Americans (82%) report seeing or hearing prescription drug ads.
2. About half of the US public (51%) say they think that prescription drug advertising is mostly a good thing.
3. Many say drug advertisements do a good or excellent job of telling consumers which condition or disease the drug is designed to treat (50%), as well as communicating the potential benefits (47%) and potential side effects (44%).
4. The public overwhelmingly favors requiring the FDA to review prescription drug advertisements for accuracy and clarity before they can be aired to the public (89%), an opinion held by nearly identical shares of republicans, democrats, and independents.
5. About 28% say they have talked to a doctor after seeing or hearing prescription drug ads. Of those, roughly 15% were recommended to make changes to their lifestyle, about 14% were recommended a different drug, 12% were given the prescription they asked for, and 11% were recommended an over-the-counter drug.

A hot-button political issue

Issues with drug costs have become a topic of debate in the current presidential primary races. Both Bernie Sanders and Hillary Clinton’s campaigns have identified pharmaceutical companies as among their “favorite enemies.” The Clinton campaign has created a policy to crack down on high prescription drug costs, targeting DTC advertisements. Specifically, they want to eliminate the ordinary and necessary business expense deduction for the cost of prescription drug advertising.[7] This is aimed at curbing the cost of drugs by limiting the deductions that pharmaceutical companies can take.

Immediate action on the political front is most likely not imminent. Clinton has the clearest plan to address DTC advertising, and she would have to get elected first, and then shepherd a bill through Congress. This proposal would also run up against free speech rights, making congressional approval an uphill battle.

DTC is driving much needed dialogue

We are all too familiar with the lack of awareness among both patients and physicians that can plague treatments. This is true even when these treatments have unique and differentiated efficacy benefits. DTC raises awareness of these treatments. The patient can use this awareness to foster an informed and engaged dialogue with the physician, potentially achieving a more positive treatment outcome. Clearly, in most cases the outcome is not that the patient walks in, demands an expensive treatment, and then receives it, as the AMA seems to assert.

The Kaiser data clearly state that only 12% of people who request a specific medicine received that specific medicine.[3] Many others were prescribed another treatment, or their doctor recommended changes in behavior or lifestyle. At the very least, this suggests that DTC advertising may have improved outcomes for patients and potentially saved costs.

Looking forward

We predict that DTC drug advertising will remain a hot-button issue. It has been practiced in its current form for just a few decades and is currently only legal in the USA and New Zealand.

The pressures of healthcare costs are real for patients: 42%[3] say that drugs are somewhat or very difficult to afford. That problem is unlikely to go away anytime soon. As an industry, we need to ensure that we are making the most out of programs that aim to alleviate these problems. Furthermore, we need to remain vigilant to ensure that DTC, and drug promotion in general, do not take the entire blame for the high cost of healthcare, as other factors clearly contribute.

[1] Rosenthal E. Ask your doctor if this ad is right for you. New York Times. February 27, 2016. http://www.nytimes.com/2016/02/28/sunday-review/ask-your-doctor-if-this-ad-is-right-for-you.html. Accessed March 9, 2016.

[2] AMA calls for ban on direct to consumer advertising of prescription drugs and medical devices [press release]. American Medical Association; November 17, 2015. http://www.ama-assn.org/ama/pub/news/news/2015/2015-11-17-ban-consumer-prescription-drug-advertising.page. Accessed March 9, 2016.

[3] DiJulio B, Firth J, Brodie M. Kaiser Health Tracking Poll: October 2015. http://kff.org/health-costs/poll-finding/kaiser-health-tracking-poll-october-2015/. Published October 28, 2015. Accessed March 9, 2016.

[4] US measured ad expenditures declined 3.9% in Q3 2015 to $36 billion [press release]. Kantar Media; December 16, 2015. http://www.kantarmedia.com/us/newsroom/press-releases/us-measured-ad-expenditures-declined-3-9-q3-2015-36-billion. Accessed March 9, 2016.

[5] 2015 acceleration in health spending growth is moderating [press release]. Altarum Institute; October 9, 2015. http://altarum.org/about/news-and-events/2015-acceleration-in-health-spending-growth-is-moderating. Accessed March 10, 2016.

[6] Jaret P. Prices spike for some generic drugs. AARP website. http://www.aarp.org/health/drugs-supplements/info-2015/prices-spike-for-generic-drugs.html. Published July 2015. Accessed March 9, 2016.

[7] Hillary Clinton’s plan for lowering prescription drug costs [press release]. Hillary Clinton campaign website; September 21, 2015. https://www.hillaryclinton.com/briefing/factsheets/2015/09/21/hillary-clinton-plan-for-lowering-prescription-drug-costs/. Accessed March 9, 2016.