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Plavix advertising indirectly cost taxpayers an extra $207 million over five years*

November 23, 2009 |  5:09 pm

Advertising brand-name prescription medications directly to patients is a uniquely American custom, and a controversial one at that. A study published today in the Archives of Internal Medicine may stir new debate over the practice. In the case of one blockbuster drug, the study found, a major advertising campaign did little to expand the medication's use but brought price hikes that cost taxpayers hundreds of millions over a seven-year period.

Both critics and defenders of direct-to-consumer drug advertising agree on one thing: that the advertising of prescription medications will run up the bill that taxpayers foot to provide healthcare insurance to the elderly, disabled and poor through Medicare and Medicaid. When patients see commercials for a branded drug, they will ask for these medications in greater numbers, and they will get them, the reasoning goes.

But whether that higher price tag buys better healthcare is the point of dispute. Critics charge that advertising allows drug companies to pump up their sales to Medicare and Medicaid patients who might otherwise be treated with safer, cheaper medications. Defenders of the practice argue that drug ads spur more patients to seek treatment for conditions (such as high blood pressure or depression) that are widely under-diagnosed: Sure, it'll cost the taxpayer more, they say, but that's because more Medicare and Medicaid patients will get the treatment they need because they saw an ad.

But what if neither side is right? What if advertising a drug did not spur a rise in a drug's use, just in its price?

That, effectively, is what a pair of Canadians who teamed up with researchers from Harvard University and Kaiser Permanente found when they looked at the cost and use of the drug Plavix,* used to prevent blood clots, from 1999 to 2005. Plavix was on the market for two years, and its use was growing steadily when Bristol-Myers Squibb launched a major advertising campaign for the drug in 2001. Over the next five years, the drug company spent $350 million to promote Plavix in advertisements aimed at consumers.

But according to Michael Law of the University of British Columbia, the advertising campaign did not accelerate the growth in sales of Plavix, which reached $5.9 billion in 2005. While they continued to grow, Plavix sales grew no faster after advertising began than they had before the ads hit the airwaves.

But the cost of the drug certainly accelerated, Law found. Looking at Medicaid expenses in 27 states, Law and his co-authors found that the cost of Plavix shot up from $3.40 per prescription just before advertising began. "Immediately after [advertising] initiation, we found a large, sudden, and statistically significant increase" of 12% in the cost of a Plavix prescription. By the end of 2005, the cost to taxpayers a Plavix prescription filled by a Medicaid patient rose 25% beyond the more modest rate of inflation that would have been expected before advertising began.

Translation: In the Medicaid program alone, just 27 states spent a collective $207 million more on Plavix prescriptions after the big advertising campaign began than would have been expected. If one were to figure in the added cost to Medicare programs and the Medicaid programs of the remaining 23 states, the added cost would look like real money indeed.

Lawmakers in recent years have wrangled over whether and how to rein in drug advertising directed at patients rather than physicians, with no changes made to date. The authors say it's not time to put the debate aside. "Payers and policymakers should appropriately still be concerned about [direct-to-consumer advertising] increasing total drug costs for publicly funded reimbursement programs such as Medicare and Medicaid," they wrote.

--Melissa Healy

* An earlier version of this post incorrectly said that Plavis is a cholesterol drug.

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