From the GIC Summer 2002 Newsletter pdf format of    fybsummer2002.pdf

Increased utilization is the primary driver of exploding prescription drug costs. Between 1992 and 1998, the number of prescription drugs sold has increased 37 percent. According to the Bureau of National Affairs, the three billion prescriptions sold in 2000 are expected to rise to 4 billion by 2004. This utilization is being caused by an aging population, aggressive marketing to physicians, and direct-to-consumer advertising.

Aging population: As the population continues to age, pharmaceutical utilization increases. Older Americans and people with disabilities have more acute and chronic illnesses and use more prescription drugs for treatment. Retirees, representing thirteen percent of the population, account for 40 percent of all prescriptions dispensed.

Aggressive Marketing to Physicians: Drug companies spent $8 billion in 2000 on advertising and employed 83,000 sales representatives to influence doctors. Additionally, they provided another $8 billion in free samples to physicians. Imagine your doctor's office. Did you notice any pencils, coffee cups, or pads of paper with a pharmaceutical drug's name on it? Marketing efforts aimed at doctors take up more than 80 percent of pharmaceutical promotional budgets.

Direct to Consumer Advertising: Direct to consumer advertising has grown from $791 million in 1996 to $2.5 billion in 2000. Direct advertising accounts for 16 percent of drug promotion. Most advertising is concentrated on a few drugs, primarily those that treat chronic conditions and drugs with a low occurrence of mild side effects. For example, in 2000 $161 million was spent to promote Vioxx, an anti-inflammatory drug, and $100 million was spent on Claritin, an antihistamine. Direct advertising works. According to a recent FDA study, one quarter of patients requested a specific brand of drug during visits to the doctor and sixty-nine percent had the requested drug prescribed.


This information provided by the Group Insurance Commission.