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Potential Effects of a Ban on Direct-to-Consumer Advertising of New Prescription Drugs 1 (May 2011)

handle is hein.congrec/cbo08027 and id is 1 raw text is: CBO A series ofissue summaries from the Congressional Budget Office MAY 2011 Potential Effects of a Ban on Direct-to-Consumer Advertising of New Prescription Drugs Summary and Introduction Direct-to-consumer (DTC advertising of prescription drugs has elicited various concerns. One concern is that DTC advertising may add to spending on drugs by consumers, insurers, and the federal government without providing enough benefits to justify that spending; specifically, some observers worry that DTC advertising encourages broader use of certain drugs than their health benefits warrant. Another concern is that DTC advertis- ing for newly approved drugs may lead people to use drugs whose potential risks were not fully discovered during the drug approval process. Those concerns have spurred recent proposals for a moratorium on advertising brand-name prescription drugs to consumers during the first two years following a drug's approval by the Food and Drug Administration (FDA). Although such a moratorium would allow more time for safety concerns about a new drug to be revealed, it would entail health risks of its own, because some individuals who would benefit from a new drug might be unaware of its avail- ability in the absence of consumer advertising. A moratorium on direct-to-consumer advertising might affect other marketing strategies used by drug manufacturers and the quantities and prices of drugs sold. To highlight some of those effects, this Congressio- nal Budget Office (CBO) issue brief draws on data documenting DTC advertising and other promotional activities used by pharmaceutical producers as well as aca- demic analyses of how advertising has affected the market for drugs. The expected effects of a moratorium include the following: m Drug manufacturers would probably expand their marketing to physicians to substitute for at least some of the banned advertising to consumers. m The number of prescriptions filled would probably decrease for some drugs. For other drugs, the number of prescriptions might be little changed, owing both to the likely substitution of other types of promotions and to the various other factors that influence a drug's reach in the prescription drug market. * Any change in prescription drug prices would depend on changes in demand; to the extent that the effects on demand are likely to be limited, so too are the effects on prices. In addition, a moratorium could affect public health. That impact is uncertain, depending on whether the benefits of fewer unexpected adverse health events were larger than the health costs of possibly reduced use of new and effective drugs. Use of and Concerns About DTC Advertising Consumer advertising of prescription drugs and the eco- nomic and health concerns that surround it have been an issue since at least the late 1990s, when pharmaceutical manufacturers intensified their efforts to promote pre- scription drugs directly to consumers. Until then, drug makers had focused their marketing efforts on physicians and other health care providers. That change came about as a result of new guidelines issued by the FDA. In 1997, the agency issued draft regu- latory guidance (which was finalized two years later) that clarified the rules about the way DTC advertisements in the broadcast media present drug information. Since then, many prescription drug manufacturers have increased their purchases of television and radio air time, as well as newspaper and magazine advertising space, to make consumers aware of drug makers' products and to encourage consumers to visit their doctors for more information. In 2008, spending on DTC advertising totaled $4.7 bil- lion, nearly one-fourth of pharmaceutical manufacturers' expenditures for all promotional activities (see Figure 1).

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