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Pharmaceutical Advertising

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"Pharmaceutical Advertising"

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The Congressional Budget Office has an interesting look at pharmaceutical marketing.

For one thing, all those ads you see on TV are only a small portion of the marketing that takes place:

pharma1

But beyond that, only a tiny fraction of drugs get marketed to consumers at all:

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You get more DTC advertising for newer drugs and drugs that treat more common diseases. Interestingly, you also get more DTC spending for drugs with fewer competitors. The suggests this is because “Some research suggests that DTC advertising encourages individuals to visit their doctors and increases sales for the advertised drug’s class—but not necessarily for the advertised drug itself.”

The pretty hefty quantity of advertising going on underscores one of the main flaws with relying on patent monopolies to produce new drugs. It’s relatively sensible to make it more profitable to treat a drug that will 1 million more rather than a drug that will help 100,000 people. But patent-based financing means that it’s more profitable to sell the drug to 2 million people even if only 1 million actually benefit from it. A system of prizes or publicly funded research would still allow extra resources to be dedicated to more common problems, but wouldn’t have incentives to overreach in the application of drugs or spend huge sums trying to convince people they suffer from problems they may not really have.

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