Consumer Drug Advertising Triples, Study Finds

June 12, 2003
Drug companies have tripled their direct-to-consumer advertising budgets in recent years, accounting for 12 percent of the increase in drug spending in the year 2000, according to a study by the Kaiser Family Foundation.

The study, conducted by researchers at Harvard University and the Massachusetts Institute of Technology, found that direct-to-consumer advertising increased to $2.7 billion in 2001 from $800 million in 1996.

The study resolved any doubts over whether consumer ads are effective. The researchers found that the advertising produced about $4.20 in sales for every $1 spent on consumer drug ads.

The study compared consumer advertising to more traditional approaches such as sending drug representatives to meet with physicians, distributing free drug samples and advertising in medical journals.

Promotions directed at physicians accounted for 86% of overall marketing spending, with 55% used for free drug samples, 29% spent on drug representative contact with physicians and 2% allocated to medical journal advertising. Consumer advertising accounted for only 14% of marketing activities, according to the study.

In addition, the study found that consumer ads lifted sales not only of the specific brands being advertised but also for similar drugs. That's because doctors -- not consumers -- have the final decision on what drugs to prescribe. Thus, a patient might demand a new antihistamine, leaving the doctor to decide which one is most suitable.

"Some have suggested that DTC advertising is a primary reason for the significant pharmaceutical cost increases that we have seen in recent years," said Dr. Drew Altman, president and CEO of the Kaiser Family Foundation. "This study shows that (such) advertising is an important factor, but not the primary cause."

The full text of the study is available online (Adobe Acrobat required).