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Big Pharma's Sick Ad Budgets


Where the industry really spends its money.

We've all seen the commercials for erectile-dysfunction drugs like Viagra and Cialis (some decidedly more tasteful than others), but you probably never thought about how much pharmaceutical companies are really spending to tell you that their drug will make you a stallion in the bedroom.

With health-care expenditures top of mind for the current administration, the Congressional Budget Office is trying to get a little more clarity on where exactly all that money in the pharmaceutical industry is going.

The CBO released a report this week that broke out the amount of money the pharma industry is spending on promotional activities and what sort of advertising is garnering the big bucks.

According to the report, pharmaceutical manufacturers spent at least $20.5 billion on promotional activities in 2008 with more than half of that money ($12 billion) going to a process that's referred to as detailing, where sales reps meet with doctors and nurses to persuade them that they should prescribe a drug more often than its competitors.

About $3.4 billion of the total spend went to sponsoring professional meetings and events, while $400 million went to ads in professional journals. According to the industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA), the total promotional spend in 2008 made up about 10.8% of total US sales reported by the manufacturers ($189 billion last year).

On the direct-to-consumer (DTC) front, a type of advertising that began in the early 1990s and is now regulated by the US Food and Drug Administration, pharma companies forked over $4.7 billion on ads last year, with $1.6 billion being spent on television ads alone.

As you can imagine, not all drugs warrant a DTC campaign -- most patients are going to ask a doctor for a specific cancer treatment, but may mention to their physician that they'd prefer one sleeping med over another. According to the CBO report, ED drugs command the highest amount of DTC advertising spend at $320 million, while osteoporosis drugs and sleep aids followed closely behind.

With billions of dollars going to the promotion of prescription drugs every year and such a large percentage of that spending going to detailing, it's easy to see how drug companies are so frequently getting into trouble for marketing the off-label uses of its drugs that the FDA hasn't approved (even though doctors have the right to prescribe drugs for uses other than those on the label).
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