Consumer Advertising Could Be Behind Spike in Prescription Drug Prices

Prescription drug prices have risen 9.3 percent since October of 2008, according to a finding by the AARP Rx Watchdog Report.  In remarks on the price increase, AARP Executive Vice President John Rother said, “This report confirms what most older Americans already know:  drug makers are raising their prices and enjoying windfall profits, even as the rest of the economy is suffering.  The pharmaceutical industry should be embarrassed when it sees its own price increases put side-by-side with the general inflation rate.  Even as the cost of most goods and services drops, a person taking just one brand name drug now pays $200 more per year than a year ago.”

Another study found that consumer advertising might boost the price of prescription drugs.  A case in point is the blood-thinning drug Plavix, which is heavily advertised on television.  An article in the Archives of Internal Medicine, written by Dr. Michael R. Law of the University of British Columbia in Vancouver, found that Medicaid costs for Plavix rose after manufacturer Bristol Myers Squibb/Sanofi-Aventis began advertising the drug to consumers in 2001.  After the ad campaign started, Plavix cost 40 cents more per pill, a 12 percent increase that added $207 million to Medicaid spending on prescription medicines.

Earlier research conducted by Dr. Law found that advertising didn’t result in an increase in people taking the medication.  “The public should rightly wonder why they’re paying millions in extra drug costs to pay for advertising campaigns that don’t work,” Dr. Law said.  In response, Plavix’s manufacturer notes that “The Bristol Myers Squibb/Sanofi pharmaceutical partnership support direct-to-consumer advertising as a way to encourage consumers to play a more active role in their healthcare.”

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