Direct to Consumer Advertising

Direct to Consumer Advertising

  • Submitted By: ssuny
  • Date Submitted: 02/18/2009 9:42 AM
  • Category: Business
  • Words: 3558
  • Page: 15
  • Views: 1033

Direct-to-Consumer Advertising

1. Introduction
The Pharmaceutical industry operates in a way that differs from most other industries. Big Pharmaceutical corporations spend years, and billions of dollars developing their drugs. For each new treatment developed only three in ten prove profitable. The vast majority of revenue for these companies comes from so called “blockbuster” drugs, or ones with revenue exceeding one billion dollars. It is understandable then that the industry wants to increase awareness for their blockbusters as much as possible. To do so they often advertise straight to the consumer, a procedure known as direct to consumer advertising (DTCA). The Pharmaceutical companies maintain the advertisements generate positive return on investment and can lead to better health care decisions between doctor and patient. The practice is not without detractors, however, who claim the ads interfere with the doctor patient relationship and create unnecessary demand for the highest price brand name drugs, ultimately resulting in the higher medical expense in US. Also, safety concerns of prescription drugs such as anti-depressants and Cox-2 inhibitors have shed the light on other potential problems of DTCA. In an industry-wide controversy, the fight over direct to consumer advertising shows signs of heating up.

DTCA Spending by Pharmaceuticals

The United States is one of only two developed countries that allow DTCA of prescription drugs. (The other country is New Zealand). A November 2006 report by the U.S. Government Accountability Office stated that drug companies spent $4.2 billion in 2005 on DTCA (Table 1). In comparison the drug industry spent $7.2 billion in 2005 promoting drugs to physicians and $31.4 billion on research and development. Given DTCA, Promotions to physicians and Retail value of samples constitute major portion of the total promotion spending, DTCA accounts for just 14% in 2004, suggesting that the combination of sampling and...

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