Healthy Skepticism Library item: 9801

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Hall J.
Drug ads would spark $10B frenzy: Study
Toronto Star 2007 Apr 21
http://www.thestar.com/article/205704

Full text:

Pharmaceutical spending to jump 30 per cent, threaten medicare, if firms target users directly

Allowing American-style drug ads in Canada would lead to massive increases in pharmaceutical spending and severely stress an already vulnerable health-care system, a new study suggests.

Canadians might expect to see a $10-billion-a-year increase on drug spending in the aftermath of such mass advertising in this country, says study author Steve Morgan, a University of British Columbia health economist.

“It could increase our total expenditures on pharmaceuticals by 30 per cent,” says Morgan, of U.B.C.‘s Centre for Health Services and Policy Research.

“That is a staggering amount. You could hire 40,000 doctors and pay them $250,000 a year for that amount.”

The paper appeared this week in the first edition of the new Canadian online journal Open Medicine.

Morgan, a researcher with the Canadian Institutes of Health Research, wrote an affidavit as an expert witness in a case, involving CanWest MediaWorks Inc., that is challenging federal bans on prescription ads. He expects to be called as a Crown witness when the trial starts, probably next spring.

In papers filed in December 2005, media giant CanWest asked the Ontario Superior Court of Justice to strike down federal laws banning many direct ads of pharmaceuticals to consumers as a violation of free expression under the Charter of Rights and Freedoms.

While Canada allows ads for over-the-counter medications such as common pain relievers and cold relief medications, there is a wide-ranging, though often-breached ban, on so called “direct-to-consumer” ads that make claims of prescription drug benefits.

Morgan says the increased consumer demand for drugs that would follow American-style ads here would put both employer-supported and provincially sponsored health plans at risk.

Together, private and public drug spending already represents the fastest growing segment of our health-care system, says Morgan. In 2005, some $16.6 billion was spent on prescription drugs in this country. That same year Canada’s health-care spending was $142 billion – $99 billion of it public sector, according to the Canadian Institute for Health Information.

The main concern for Morgan and others against the CanWest challenge is “U.S.-style” ads that specifically associate a drug with beneficial health effects and have run with spectacular success on U.S. television since 1997.

The U.S. and New Zealand are the only industrialized countries that currently allow such ads, says Barbara Mintzes, an expert on pharmaceutical advertising at U.B.C. Most others, she says, have banned them on grounds they can harm a nation’s chosen health programs and policies. She is also associated with the Crown in the CanWest case.

Although huge numbers of American ads are seen in Canada, especially on T.V. and in U.S. magazines, consumers south of the border see many more. And, Mintzes says, studies have shown that Americans are much more aware of advertised prescription drug products than Canadians.

Morgan says there’s evidence the very effective ads cause massive increases in prescription drug expenditures.

U.S. pharmaceutical companies spent $4.24 billion on direct-to-consumer advertising in 2005 – 11 times more than they did a decade earlier – and those expenditures have likely risen significantly since, he says.

Since 1997, when U.S. Federal Drug Administration regulations opened the floodgates to product-claim ads on television, per-capita drug expenditures south of the border have skyrocketed, Morgan says.

While prescription drug expenditures doubled in Canada between 1995 and 2005, they rose substantially faster in the U.S.

Indeed, between 1975 and 1995, Americans never outspent Canadians by more than $36 a year per capita on pharmaceutical drugs. By 2005, U.S. residents were spending $356 more on these medications.

Over the same time frame, U.S. drug spending on direct-to-consumer advertising jumped from $2 per capita in 1995 to $18 a decade later.

“The difference in per-capita expenditures on prescription drugs in the United States and Canada began to increase at almost exactly the same time (direct to consumer ads) began to flourish in the United States,” Morgan’s paper says.