Medical Product Marketing Spending

By January 14, 2019 Commentary

Advertising is pervasive in American commercial life, and unfortunately, I believe, has invaded health care as well.  A review in JAMA looks at marketing spending on drugs and by providers over the last two decades.   (JAMA Article)   As anyone who watches TV or listens to the radio knows, the amount of money spent on marketing activities, primarily advertising, has grown dramatically over that time period.  Spending in 1997 was $17.7 billion, according to this analysis, and rose to $29.9 billion in 2016.  Marketing to medical professionals was $15.6 billion in 1997, or 88% of the total, and was $20.3 billion in 2016, or 68% of the total.  Meanwhile direct-to-consumer advertising rose most dramatically, from $2.1 billion to $9.6 billion.  Marketing for medical devices and equipment was not included, but I believe also rose rapidly over this period.  By 2017, $26.9 billion of the total spend, or 90%, was on prescription drugs.  Large gains in spending occurred in the diabetes, dermatology, pain and cardiac therapeutic categories.  The number of advertisements increased from 79,000 to 4.6 million.  In addition to specific ads for products, there was a dramatic rise in “disease awareness” spending, in which a drug company talks about a disease, says that you should talk to your doctor because new treatments may be available, but doesn’t mention its specific product for the condition.  Spending on face-to-face marketing between sales reps and clinicians was relatively stable over the period at around $5 billion, probably in part because many clinicians won’t see drug company reps and partly because drug companies find it more effective to drive demand through consumers.  As the authors acknowledge, due to data source limitations, all the amounts they list are likely greatly understated.

Proponents of advertising claim it has value because it provides useful information to patients and allows product comparisons that enhance competitive forces.  I think that is mostly bullshit; the reason firms spend money on advertising is to use emotional hooks to try to create demand and brand loyalty.  A lot of manufacturers and providers have little interest in having accurate information about their products or services available to consumers.  And health care is an inherently emotional topic, so allowing advertising mostly just creates misinformation and, again, plays on emotions.  In the case of products, it creates uncomfortable situations for clinicians, in which they must often appear to be denying potentially desirable care to patients, and it leads to inappropriate demand and use of drugs and devices.  In regard to provider marketing, it is primarily used by already dominant health systems to extend their brand and ability to charge exorbitant prices.  So I don’t think marketing does anything useful in health care.  Better to have a single website where factual information about all products can be made available and where accurate information on providers is available, and ban all advertising.  Among other things, that would lower producers costs, which might even lead to lower prices.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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