Healthy Skepticism Soapbox
Drug promotion does more harm than good
Seven good reasons to be concerned about drug promotion
Drug companies spend on average around 35% of sales on promotion.
Companies would not spend such massive amounts on promotion if it were not effective at influencing prescribing. In Australia spending on drug promotion has now reached somewhere between $ 1.3 billion to $ 2.0 billion per year. (See calculations below)
Promotion influences prescribing much more than most health professionals realise.[2-6]
Many advertisements and statements from pharmaceutical representatives are misleading.[7,8]
Promotion which exaggerates benefits and glosses over risks, threatens optimal treatment.
Reliance on promotional information may endanger lives and expose prescribers to the risk of litigation.
Thirteen observational studies have found that exposure to pharmaceutical promotion and doctors positive attitudes towards pharmaceutical promotion both correlate with harmful use of pharmaceuticals.[10-23]
Estimated spending on drug promotion in Australia
by Peter R Mansfield
updated 29 June 2004
Spending on drug promotion is increasing. We estimate that spending on promotion of prescription pharmaceuticals is now somewhere between $ 1.3 billion to $ 2.0 billion per year.
Here are the calculations:
Expenditure on pharmaceuticals
Pharmaceutical Benefits Scheme + patient contributions 12 months to March 2004 = $5,807,472,617
Repatriation Pharmaceutical Benefits Scheme (War veterans) 12 months to March 2004 = $449,988,010
Total expenditure on prescription only pharmaceuticals during the 2000-2001 financial year was $5,896 million not including hospital drug spending.
source: Australian Institute of Health and Welfare. Health System Expenditure on Disease and Injury in Australia 2000-01: Health and Welfare Expenditure Series No. 19. May 2004 http://www.aihw.gov.au/publications/index.cfm/title/10006
That year PBS spending including patient contributions $4,564,721,602 + RPBS spending $325,142,363 = $4,889,863,965
So Private spending was $5,896 million - $4,889,863,965 = $1,006,136,035
2001-02 total expenditure on public (psychiatric and acute) hospitals was $16.8 billion of which 5% was for drug supplies = $ 840,000,000.
source: Australian Institute of Health and Welfare. Australian Hospital Statistics 2001-02. Health Services Series No. 20. (http://www.aihw.gov.au/publications/index.cfm/title/8881)
+ $ 449,988,010 RPBS
+ $1,006,136,035 Private
+ $ 840,000,000 Hospital
+ $ growth in private prescription spending since 2000-2001
+ $ growth in hospital spending since 2001-2002
= $8103596662 + ?
We will estimate total annual expenditure on prescription pharmaceuticals to be 8.2 billion in round figures.
Drug companies get on average about 70% of the retail price of drugs.
source: personal communication to Ken Harvey from Angela Shepherd, Project Officer, Health Economics Division, National Secretariat, Pharmacy Guild of Australia 16 May 2002
She wrote: “The relative share of PBS expenditure that pharmacy has received has fallen from 29.2% in 1991/92 to 22.1% in 2000/01. At the same time it is clear that pharmaceutical manufacturers have been receiving an increasing share of the PBS expenditure. Their share has increased from 63.7% in 1991/92 to 70.1% last financial year.[2000/01] Meanwhile, the share that wholesalers receive has remained fairly steady.”
70% of $8.2 billion = $5.74 billion
At the 2000 National Medicines Symposium Alan Evans (then CEO of the Pharmaceutical Manufacturers Association) said during a plenary session that drug companies spent about 30% of sales on promotion. This is in the middle of the two other estimates that we have:
European drug companies spent 24% of sales on promotion in 1989.
Source: Jacobzone S. Pharmaceutical policies in OECD countries. Labour Market and Social Policy Occasional Papers No.40, OECD, 2000 (NB they were not able to access more up to date data.)
A survey of drug company management executives estimates of how much was spent on promotion averaged at 35%.
Source: Devlin J, Hemsley P. Management views on industry issues, pressures and consultants. Scrip Magazine. 1997 June 16-183.
35% of $5.74 billion = $2.009 billion
30% of $5.74 billion = $1.722 billion
24% of $5.74 billion = $1.3776 billion
Conclusion: The best estimate is that Australia spends between 1.2 and 1.9 billion per year on drug promotion.
1. Devlin J, Hemsley P. Management views on industry issues, pressures and consultants. Scrip Magazine. 1997 June 16-183.
2. Caudill TS, Johnson MS, Rich EC, McKinney P. Physicians, pharmaceutical sales representatives and the cost of prescribing. Arch Fam Med 1996; 5:201-6
3. Orlowski JP, Wateska L. The effects of pharmaceutical firm enticements on physician prescribing patterns: There’s no such thing as a free lunch. Chest 1992;102:270-73
4. Waud DR. Pharmaceutical promotions. New Engl J Med 1992;327:23:1688
5. Chren M-M, Landefeld CS. Physicians’ behaviour and their interactions with drug companies: A controlled study of physicians who requested additions to a hospital drug formulary. JAMA 1994;271:9:684-9
7. Wilkes MS, Doblin BH, Shapiro MF. Pharmaceutical advertisements in leading medical journals: Experts’ assessments. Ann Int Med 1992;116:912-919
8. Roughead EE. The pharmaceutical representative and medical practitioner encounter: implications for quality use of medicines. Masters Thesis. School of Health Systems Sciences. La Trobe University. Aug 1995 Link to full text of this thesis
9. Aders HP. Legal liability and drug prescribing. Cur Therap 1991;32:6:17-21
10. Becker MH, Stolley PD, Lasagna L, McEvilla JD, Sloane LM. Differential education concerning therapeutics and resultant physician prescribing patterns. J Med Educ 1972;47:118-27.
11. Linn LS, Davis MS. Physicians’ orientation toward the legitimacy of drug use and their preferred source of new drug information. Soc Sci Med 1972;6:199-203.
12. Mapes R. Aspects of British general practitioners’ prescribing. Med Care 1977;15:371-81
13. Haayer F. Rational prescribing and sources of information. Soc Sci Med 1982;16:2017-23.
14. Ferry ME, Lamy PP, Becker LA. Physicians’ knowledge of prescribing for the elderly: a study of primary care physicians in Pennsylvania. J Am Geriatr Soc 1985; 33:616-21.
15. Blondeel L, Cannoodt L, DeMeyeere M, Proesmans H. Prescription behaviour of 358 Flemish general practitioners. Paper presented at the International Society of General Medicine meeting, Prague, Spring 1987.
16. Bower AD, Burkett GL. Family physicians and generic drugs: a study of recognition, information sources, prescribing attitudes, and practices. J Fam Pract 1987;24:612-6.
17. Cormack MA, Howells E. Factors linked to the prescribing of benzodiazepines by general practice principals and trainees. Family Practice 1992;9:466-71.
18. Berings D, Blondeel L, Habraken H. The effect of industry-independent drug information on the prescribing of benzodiazepines in general practice. Eur J Clin Pharmacol 1994;46:501-505.
19. Caudill TS, Johnson MS, Rich EC, McKinney WP. Physicians, pharmaceutical sales representatives, and the cost of prescribing. Arch Fam Med 1996;5:201-6.
20. Powers R. Time with drug reps affects prescribing. Paper presented at the Society of General Internal Medicine meeting, 1998
21. Mansfield PR, Lexchin J. Scepticism and beliefs about new drugs. Healthy Skepticism International News 2001;19:1/6 http://web.archive.org/web/20050210022101/http://www.healthyskepticism.org/editions/2001/IN0106.htm22. Caamano, F.; Figueiras, A., and Gestal-Otero, J. J. Influence of commercial information on prescription quantity in primary care. Eur J Public Health. 2002 Sep; 12(3):187-91.
23. Watkins, C. Harvey, I. Carthy, P. Moore, L. Robinson, E. Brawn, R. Attitudes and behaviour of general practitioners and their prescribing costs a national cross sectional survey. Qual Saf Health Care. 2003 Feb; 12(1)29-34.
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