Nexium's Start Turn

As TV ads hype the demand for costly brand-name drugs, those who pay Medicaid's pill bill are fighting back.
May 2005
Penelope Lemov
By Penelope Lemov  |  correspondent
Penelope Lemov is a GOVERNING correspondent. She was GOVERNING's health columnist and was senior editor for several award-winning features.

Inflation. An aging population. Research breakthroughs. The reasons are legion for why prescription drugs are the fastest-growing portion of the health care dollar--and are pulling more dollars into the health care pot.

But there's another more mundane factor: advertising. In 1997, the U.S. Food and Drug Administration gave drug manufacturers the go-ahead to sell their products on television, and as most of us know by now, Viagra is hyped just like a pair of Nike sneakers, and Nexium (the purple pill) is pitched as though it were a Ford Explorer.

The drug industry's term for this is "direct to consumer," and pharmaceutical companies see DTC ads as a means of educating consumers about products available for their well-being. The companies have plowed money into that belief--$4 billion last year or 15 times as much as the industry spent on DTC in any given year before 1997. For state health officials, it's interesting to note that the increase in DTC advertising happens to coincide with a surge in Medicaid spending on prescription drugs--from $731 million a year in 1997 to $2.4 billion today.

Those who pay that pill bill see DTC ads through a different prism. At the National Managed Healthcare Congress meeting this spring, Anthony Horbal, the CEO of Ion Health, a Medicaid managed-care organization, called attention to the "purple pill syndrome." As he described it, marketing efforts by drug companies have been so successful that patients are self-diagnosing and then insisting that their physicians prescribe expensive brand-name medications--even when less costly and equally effective medicines are available. The issue comes to a head for his company, he said, when patients, disgruntled if denied the prescriptions of their choice, switch to another insurance company.

A good number of patients, whether in public or private programs, manage to get those prescriptions filled. A Kaiser Family Foundation survey found that nearly half of the 30 percent of adults who ask their doctors about advertised medications receive prescriptions for them. As to the physicians, half of those surveyed said the ads made the drugs seem better than they are, but several said they felt pressured to write prescriptions for the drugs anyway.

Can anything bring some balance to prescription writing? One sign of hope is the industry itself. Drug companies have become concerned about negative fallout from their advertising efforts. The debacle over Vioxx is a case in point. Here was a drug that could ease pain and tamp down inflammation without causing that gastric distress that existing medicines, such as ibuprofen (Advil) and other anti- inflammatories, did for some people. Vioxx was much more expensive than its over-the-counter alternatives, and it was marketed not just to those who couldn't stomach ibuprofen but to everyone. Even as it got picked up for widespread general use, problems with it surfaced, and the drug had to be withdrawn. The FDA made a mistake in its follow-up on Vioxx but the drug's marketing campaign compounded the problem, bringing unwanted additional attention to the medication. In the end, the marketing campaign encouraged some consumers and regulators to question the information about drugs that was being disseminated by TV ads.

The pharmaceutical industry is looking for a solution to the advertising conundrum. William Weldon, the chief executive of Johnson & Johnson, announced that his company is designing its DTC ads to address safety issues and give consumers information about risks as well as benefits. "The framework we call DTC advertising," he said, "may inadvertently minimize the importance and power of medicines and their risks." Weldon, who recently assumed the chairmanship of the Pharmaceutical Research and Manufacturers of America (PhRMA), appealed to other companies to consider designing their ads accordingly--as a way to improve relations with patients and doctors and stave off regulatory restrictions.

Those restrictions could come from sources other than FDA. States, with an eye on their Medicaid budgets, are looking for ways to contravene the power of TV ads to increase demand for a product. In Florida, where pharmaceuticals account for 18 percent of the Medicaid budget, state Senator Mike Bennett has proposed that drug companies that want their medicines to be on the state's preferred-drug list stop advertising those drugs on TV there.

States and localities are looking everywhere for ways to tame pill costs: importing cheaper medications from Canada, leveraging buying power through purchasing pools, demanding deep discounts for brand- name medications for the poor. A counterattack on demand is one more arrow in that quiver.