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DTC in Perspective: Thank You Mr. Pitts

April 21, 2017 by Bob Ehrlich0

No, the above is not a movie title. It is referring to an op-ed in the 4/17 Washington Examiner defending DTC by former FDA official Peter Pitts. The op-ed lays out the case why the attacks on DTC are flat out wrong or fake news as Mr. Pitts calls it in the title. Mr. Pitts correctly debunks the argument that drug companies spend more on marketing than R&D. He points out that the drug industry spent $70 billion on pre-approval R&D versus $5.6 billion on consumer advertising. He says you have to add a lot of detailing, sampling, written communications to physicians, administrative expenses, and other expenses that would not be considered marketing by most of us to exceed R&D spending. Based on several sources I found it is really about $20-25 billion spent on true marketing activities including consumer/physician advertising, physician education and sampling.

Bob Ehrlich
“Thank you Mr. Pitts.”
-Bob Ehrlich

The news media and drug industry critics like to make DTC the fall guy for high prices. Mr. Pitts correctly points out there is no evidence of that. I have said in the past that actual DTC spending is much less than reported spending at about 70% because drug companies pay less as volume buyers of ads. So that $5.6 is really about $3.9. IMS reports U.S. drug spending of $310 after discounts in 2015. How much can $3.9 drive price in a $310 billion market. Very little. While it is true DTC does raise awareness for new branded drugs, DTC is also the raising of awareness of competitive drugs. Payers play one DTC drug against another to get lower prices.

Mr. Pitts reminds critics that DTC has many benefits of raising awareness of diseases, and in 6% of DTC inspired doctor visits a previously undiagnosed condition is found. He also says only 7% of doctors report feeling pressure to prescribe an advertised drug. Mr. Pitts admits drug makers do DTC ads to sell more product. That does not make it bad or hurt public health.

As I have said in many previous columns, the world of prescription drugs has numerous constituencies. There are no truly objective ones despite a widespread belief that the doctor is always prescribing what is best. Doctors prescribe what they are experienced writing, and some are reluctant to adopt newer drugs. They may not be current on the newest treatments because of time constraints. Insurers obviously want to pay as little as possible on their drug bill and resist branded drugs. Government also is not anxious to pay for expensive drugs given the budgetary issues faced. DTC is just one more subjective constituent making a case for patients, doctors, payers, and government to consider a new brand.

So, thanks Mr. Pitts for warning the public not to fall for convenient sound bites against DTC ads.

Bob Ehrlich


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