One of the big concerns in the debate over health care reform, and rightly so, is how we’re going to pay for the costs of insuring millions of additional Americans. People are looking at various taxes and rate reductions and other mechanisms, with an emphasis on driving waste out of the system. As long as we’re talking about waste, I’d like to point out that drug companies spend tens of billions of dollars a year on marketing.
Pharmaceutical marketing expenditures generally fall into three categories: direct to consumer advertising, sales reps and samples. There are some other buckets, but these three are the biggies. From the drug company perspective, these expenditures are not wasteful. They drive market share gains for particular drugs; if they weren’t effective, the drug companies would not do them. But from a systemic standpoint they can be wasteful. Since doctors should make their prescription decisions based on data, all they need is education. Any efforts to “sell” them drugs are, theoretically, unnecessary.
Direct to consumer advertising, which is around $4 billion per year, is clearly wasteful to the system. The average person has no ability to judge between competing statins or anti-depressants or erectile dysfunction drugs. Asking your doctor for Lipitor because you saw a commercial with a pretty woman has nothing to do with data or drug efficacy. People do it all the time – that’s why we keep seeing those ads – but from a societal standpoint, that $4 billion is money being flushed away.
Sending sales reps into doctors’ offices to tell them about drugs (called “detailing” in the business) costs drug companies between $10 billion and $20 billion per year, depending on whose data you use. Part of detailing is educational – somebody has to give data to the doctors – but a large part of it is salesmanship, with lunches and perks being provided to the doctors. The fact that most drug reps are young, attractive, and nowhere near as knowledgeable about science and medicine as the doctors they are “educating” gives you some sense of what detailing is really about. As The Atlantic says, “Drug reps today are often young, well groomed, and strikingly good-looking. Many are women.” Or, in a NY Times article about how drug companies recruit college cheerleaders to be sales reps, Dr. Thomas Carli of the University of Michigan notes “There’s a saying that you’ll never meet an ugly drug rep.”
Samples cost drug companies between $6 and $16 billion, again depending on the data source. I don’t know if those figures are retail value or cost; if they are retail value, then the actual cost to the drug companies is clearly much lower, given the high margins on drugs. It would seem like sampling is unnecessary. If doctors are making their prescribing decisions based on published data, they probably shouldn’t be telling their patients “here, try this one. I got it from my rep, so it don’t cost nothin’.” On the other hand, samples give patients a period of free drugs before they have to start paying for their prescriptions, so I’m calling this a wash overall, rather than a waste. Plus, I have been the beneficiary of several courses of free drugs courtesy of samples and my awesome GP.
I know that trying to limit drug company marketing expenses is politically impossible. I also recognize that there could be 1st Amendment issues in trying to prevent companies from marketing. But with $15 to $25 billion per year being wasted, it sure would be nice if we could deploy some of that money on care instead of selling.