CSRXP ANALYSIS FINDS BIG PHARMA’S DIRECT-TO-CONSUMER (DTC) ADVERTISING COSTS U.S. TAXPAYERS BILLIONS OF DOLLARS

Study Finds Reducing or Taxing Brand Name Drug Companies’ Nearly $14 Billion in Annual Advertising & Promotion Spending Would Help Lower Prescription Drug Costs for the American People   

Washington, D.C. – The Campaign for Sustainable Rx Pricing (CSRxP) released the findings of a new analysis on Tuesday, March 18 examining Big Pharma’s spending on direct-to-consumer (DTC) advertising in the U.S. and brand name drug companies’ tax write-offs on these marketing practices.

“This analysis sheds new light on Big Pharma’s staggering spending on advertising directly targeting consumers and the scale of pharmaceutical companies’ tax benefits from writing off these marketing strategies that increase prescription drug prices for the American people,” said CSRxP executive director Lauren Aronson. “The findings of this study should add to the bipartisan momentum in Washington to bring greater scrutiny to the pharmaceutical industry’s aggressive marketing practices in the U.S., their impact on drug prices, and solutions to discourage or tax Big Pharma’s DTC advertising, which the analysis found could save the American people more than one billion dollars.”

CSRxP Study Overview & Top Takeaways

The study, conducted by CSRxP, found Big Pharma spent nearly $14 billion on DTC advertising in a single year, and that American taxpayers lose more than one billion each year in tax revenue as pharmaceutical companies write off these marketing expenses to further pad their bottom line. The analysis cites pre-existing expert research confirming Big Pharma’s staggering spending on DTC advertising increases prescription drug spending in the U.S. The study includes pharmaceutical giants AbbVie, Amgen, Biogen, Bristol Myers Squibb (BMS), Eli Lilly, Gilead Sciences, GlaxoSmithKline (GSK), Johnson & Johnson (J&J), Merck and Pfizer. Key takeaways include:

• The 10 pharmaceutical companies analyzed spent a combined $13.8 billion on advertising and promotion (A&P) in 2023 alone in the U.S.
• Taxing or prohibiting DTC ads for the ten largest pharmaceutical companies in the U.S. would result in increased federal tax revenue between $1.5 and $1.7 billion per year.

Read the full analysis HERE.

Additional Key Facts on Big Pharma’s DTC Advertising

Only Two: The U.S. is one of only two countries in the world that allow DTC advertising for pharmaceuticals.

Price Hikes and Big Ad Spending Go Hand-in-Hand: For several of the pharmaceutical industry’s best-selling products, Big Pharma repeatedly hikes prices while pushing these drugs to consumers via DTC ads. This combination drives up spending for consumers and the entire health care system. Take Bristol Myers Squibb and Pfizer’s blockbuster blood-thinning drug Eliquis, for example. The brand name drug makers have spent more than $1 billion in direct-to-consumer advertising on the drug since 2013. Meanwhile, the drug makers have increased the drug’s price by at least six percent per year for ten years. When Eliquis came to market in 2013, it carried a monthly price tag of $250 – but in 2022, the list price for a one-month supply of Eliquis was $529, more than double when it came to market.

DTC Advertising Can Lead to the Overutilization of Expensive, Older Meds: As a 2023 Forbes column highlights, DTC advertising can contribute to “the (over)use of higher-cost drugs over generics and less expensive alternatives,” which can lead to increased spending on prescription pharmaceuticals.

One-Third: In fact, one JAMA Network research paper from January 2023 found that advertising spending on drugs considered having “high therapeutic value” accounts for fewer than one-third of all DTC pharmaceutical advertisements. As the paper states, “[d]irect-to-consumer advertising is associated with use of higher-cost drugs over generics and less expensive alternatives.”

7 out of 10: An October 2021 study from America’s Health Insurance Plans (AHIP) found that seven of 10 of the largest pharmaceutical companies by revenue spent more on sales and marketing in 2020 than R&D. 

Read the full white paper on the new CSRxP study HERE.

Read more on Big Pharma’s DTC advertising HERE.

Read more on bipartisan, market-based solutions to hold Big Pharma accountable HERE.