Healthy Skepticism Library item: 18660

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: Electronic Source

Goozner M
Drug Marketing - A Form of Malpractice
GoozNews 2010 Sep 7
http://www.gooznews.com/node/3426

Full text:

Medical malpractice lawsuits add $55.6 billion to the annual cost of health care, with all but $10 billion of that attributable to physicians practicing defensive medicine by ordering unnecessary tests and procedures to avoid lawsuits, a new study in the journal Health Affairs says. While not trivial at 2.4 percent of overall health care spending, the Harvard-based authors, who included New Yorker writer Atul Gawande, concluded efforts to make it harder to file lawsuits (known as tort reform) would have at best a modest impact on rising health care costs.

After receiving an advance copy of the study last week, I contacted one its authors, Amitabh Chandra, who said that litigation and fines for illegal drug and device marketing such as the $2 billion settlement Pfizer made last year were not included in their calculations.

That is a major flaw in the study. Marketing usually accounts for somewhere between 20 and 30 percent of the total costs of drugs and devices, which combined cost health care consumers and insurers about $400 billion a year. That’s about $80 billion a year. While not all of that is waste, a lot of it is. And some of it is illegal. Extensive marketing, both legal and illegal, leads to overutilization, which is the flip side of defensive medicine. (For a comprehensive look at the FDA’s inability to crackdown on industry marketing, see this Reuters magazine article by Susan Heavey and Lisa Richwine.)

Companies price their products to cover their marketing costs. They also build in a cushion to cover the fines and lawsuits that might result if the product is unsafe or illegally marketed. So the extensive marketing of these products increases health care costs three ways: to pay for the marketing; to pay for illegal marketing; and to pay for overutilization.

I suspect a rigorous study of the role of unnecessary and illegal marketing in driving unnecessary health care costs would show that it is comparable if not greater than defensive medicine.