Healthleaders Magazine (Free Registration required)
June 25, 2002
The trouble started a few years back, says Daniel Van Durme, M.D. He witnessed the beginning of a trend that has since only picked up steam: Patients come into his office and request drugs they've seen advertised on TV.
"I would have patients asking me, 'What is this fill-in-the-blank drug and do I need it?'" says Van Durme, a board member of the American Academy of Family Physicians and associate professor and vice chairman of the department of family medicine at the University of South Florida College of Medicine in Tampa, Fla. A lot of the drugs patients asked about were for anxiety and depression, which pharmaceutical companies were advertising like crazy, he says.
"There would be no way they would ever know about them if they didn't see them on TV," he says. Discussion of advertised drugs comes up 10 to 20 percent of the time during office visits with family doctors, Van Durme asserts.
Welcome to the new reality of drug marketing.
Pharmaceutical companies are expected to spend $2.5 billion on TV and other consumer-oriented advertising this year, up from $55 million in 1991 and $1.07 billion in 1997, when the FDA relaxed rules on so-called direct-to-consumer advertising. The mushrooming money chase is a savvy bet on the part of drug companies hoping to bolster sales by inducing consumer demand. Meanwhile, managed care firms and employers are trying to counter such moves by redesigning plan benefits and encouraging employees to take generics. At this point, however, it seems like the drug companies are up 30-love.
In the old days of drug marketing, pharmaceutical companies focused their efforts squarely on physicians, advertising in medical journals, sponsoring conferences and sending tens of thousands of representatives to their doors to ply physicians with free samples and other goodies. That approach persists today, but a new front opened up five years ago when the FDA liberalized its rules on consumer advertising.
Before, drug companies weren't allowed to actually mention the specific brand name of the drug they were pushing in ads, says Judith Cahill, executive director of the Academy of Managed Care Pharmacy in Alexandria, Va. The Academy represents pharmacists who work in managed care companies and prescription benefit management firms. DTC advertising surged as a result.
"Everything out there now points to a link between advertising and sales," says Larry Levitt, a vice president at the Kaiser Family Foundation in Menlo Park, Calif. "Our surveys show that consumers, in response to ads, go to the doctor and ask for the advertised drug and many get it."
Indeed, a recent Kaiser study found that 30 percent of those surveyed asked their physician about a drug they saw advertised to treat their condition, with 44 percent of those patients receiving a prescription for that drug. Levitt says that even when doctors don't prescribe the requested drug, they often write a prescription for a competing drug. Another study by the National Institute for Health Care Management found that the 50 most-advertised drugs account for about half of the increased prescription drug spending last year.
DTC advertising has both positive and negative effects, Levitt says. People who should be on cholesterol-lowering drugs and are alerted to their existence because of the ads do benefit. But other drug classes, such as brand-name anti-inflammatories, are intended for a very small population and don't work any better than cheaper alternatives, he says. Prescribing them unnecessarily drives up healthcare costs for employers and the government through its Medicare program, Levitt says.
Homing in on the additional cost DTC advertising creates is difficult, Levitt and Cahill argue, given that there are many factors at play, including an aging population. Levitt notes that even if DTC advertising does produce sales that are several times the $2.5 billion drug makers spend each year on ads, it's only a drop in the bucket compared to the more than $100 billion Americans spent on drugs in 2000 alone. Still, any increase doesn't help when drug costs per employee rose 19.8 percent from 2000 to 2001, according to Hewitt Associates, an employee-benefits consulting firm in Lincolnshire, Ill.
Just ask George Isham, M.D., medical director and chief health officer at Minneapolis-based HealthPartners.
"There are many problems with current advertising," Isham says. "I'm afraid we're overprescribing expensive drugs to people who don't need them and can't afford them...it's a big, big problem." Isham, whose health plan has been experiencing double-digit drug cost increases during the last few years, like other plans across the country, says that it's not easy to fight back.
While plans in other states can radically alter drug copayments in an attempt to encourage members to opt for the generic alternative or drug listed on the formulary instead of the more expensive, off-formulary brand, Minnesota restricts plans from doing so, he says. Instead, HealthPartners tries to focus on physician education. For example, doctors can now download complete information about the plan's formulary into a PC, or personal digital assistant, such as a Palm. Doing so allows doctors to deal quickly with a patient's request during a visit, he says. "You need to arm people," Isham says. "When a consumer sees an ad and asks a question you need to respond to that question" with facts and a compelling case about whether the drug is or is not appropriate.
Harvard Pilgrim Health Care in Wellesley, Mass., for its part, is experimenting with a variety of techniques, says Ralph Blair, M.D., medical director for utilization management and clinical policy.
Harvard Pilgrim maintains a three-tier copayment scheme, making sure that it has a robust preferred brand-name drug class, so patients and doctors won't see the need to go to nonformulary brand drugs. Like HealthPartners, however, the plan is doing more in the area of provider and member education. The plan recently devoted a member newsletter to discussing generic vs. brand drugs. It too has its formulary online for easy access to doctors and members. Blair argues, however, that changing physician-prescribing behaviors needs the most attention. "You can't say, 'Use this, it's cheaper,'" Blair says. "What works for providers is clinical evidence."
The plan tries to get a doctor who may believe in a given drug's clinical efficacy and who also recognizes the importance of pharmaceutical management to persuade other doctors to make changes-not easy, he admits. But Blair says such efforts are starting to pay off-Harvard Pilgrim's annual drug cost increases are averaging in the low teens compared with the high teens for other plans, he says.
Health plans and employers are getting even more aggressive than tiered copay and education efforts to cope with drug cost increases, says Bridget Eber, pharmacy practice leader at Hewitt Associates. With so many brand drugs coming off patents, employers can find great alternatives to brand-name drugs with generics that weren't available even five years ago, she says. Not only are generics cheaper, but generic drug makers also give 50 percent reimbursement discounts to pharmacy benefit management companies-far greater than the 13 percent to 15 percent that brand name drug makers give.
As a result, some of Eber's employer clients are changing their tiered copay levels. Companies that now charge $7 to $10 for generics, $15 to $25 for the brand formulary and $25 and up for nonformulary brands are replacing those levels with $2 to $5, $25, and $35, respectively.
Employers are also moving in greater numbers toward coinsurance plans for drugs, Eber says. Formerly, most companies folded drug benefits into their overall health plan, making employees responsible, for say, 20 percent of the premium. Increasingly, companies are pulling out the drug benefit, leaving employees to pay a separate premium for drug coverage, she says.
The most radical area on the table, considered by health plans with Medicaid populations rather than by private employers, is making generic drugs mandatory when there is not just a chemically equivalent generic available but even when there is only a therapeutically equivalent drug available, Eber says.
Partial help may be on the way to address rising drug prices and the influence of DTC ads, in the form of current legislation before Congress to reauthorize the Prescription Drug User Fee Act. It is now up for reconsideration and part of the funds are earmarked to better monitor DTC advertising, Cahill says. But with drug makers cooling their marketing to doctors as of late, pitching consumers is only likely to increase.
As for viable solutions from Washington, Cahill just doesn't see them. "I don't see there being a real opportunity to increase policing of DTC ads right now" at the FDA, Cahill says. "The FDA have said themselves that they don't have the resources to do the policing brand-name drug advertising needs."
Howard Isenstein is a Washington, D.C.-based freelance writer.
Direct-to-consumer drug advertising is booming. This comes at a time when U.S. healthcare consumers are spending skyrocketing amounts on prescription drugs.
Amount drug makers spend on DTC drug advertisements annually: $2.5 billion
Amount U.S. healthcare consumers spent on prescription drugs in 2000 alone: More than $100 billion
Increase in drug costs per employee, from 2000 to 2001: 19.8 percent
SOURCES: Larry Levitt and Hewitt Associates