American College of Physicians: Internal Medicine — Doctors for Adults ®


How direct-to-consumer advertising is putting the squeeze on physicians

From the March 1999 ACP-ASIM Observer, copyright 1999 by the American College of Physicians-American Society of Internal Medicine.

By Phyllis Maguire

When patients ask Roger N. Gutner, MD, about medicines they have seen advertised, he braces himself for the one-sided discussions that typically ensue. Many of these patients are already convinced that the products advertised are the answer to their problems—and they mistrust him if he says otherwise. According to the very frustrated Dr. Gutner, the current wave of direct-to-consumer advertising is putting patients, not him, in the diagnostic driver's seat.

"I'm seeing many more people asking for a particular medication based on their own assessments of their conditions," said Dr. Gutner, a general internist with Pentucket Medical Associates in Haverhill, Mass. "They're basically asking me to rubber-stamp their thought processes."

It's been just over a year and a half since the FDA relaxed its guidance on broadcast drug commercials, and physicians around the country are telling similar tales. As spending on television campaigns continues to soar—drugmakers doubled their TV advertising budgets during 1998 alone—doctors complain that more and more patients are presenting them with a list of drugs they'd like to try, many of which are neither time tested nor cost effective.

Consumer advertising budgets, which totaled $1.3 billion in 1998, are expected to jump another 30% this year and, say some analysts, may reach $7 billion a year by 2005. And while patients are pressuring physicians to write scripts for inappropriate drugs, doctors are also being ordered by health plans and administrators to hold the line on spiraling prescription costs.

The new 'big kid'

In August 1997, the FDA began allowing TV and radio commercials to tout drugs' benefits without a lengthy summary of potential side effects and contraindications. Instead, broadcast advertising is required to mention only a drug's major risks and provide a Web address and toll-free phone number for consumers to get more information. (Print ads must still contain a "brief summary" of all of a drug's potential downsides.)

As a result of the FDA's relaxed interpretation, drug campaigns on television have become "the big new kid on the block as far as advertising is concerned," said Michael R. Russell, an ad industry analyst for Morgan Stanley Dean Witter in New York. According to IMS Health, a health care information company based in Plymouth Meeting, Pa., drug companies spent $495 million on TV ads from January 1998 through September 1998, more than twice the amount spent during the same period the previous year. And while overall prescription drug consumer advertising budgets rose more than 20% during those same nine months, television campaigns accounted for almost half of the money spent.

On the other hand, consumer magazine ads through September 1998 lost $50 million, or 13%, from the same period in 1997. Print ads may get a boost, however, from an upcoming FDA guidance. The agency may allow drug companies to state their "brief summary" risk information in more consumer-friendly language.

Although direct-to-consumer advertising costs are high, the payoff is just as impressive. Consider the New Jersey-based drugmaker Schering-Plough, which in 1998 spent an estimated $186 million—with almost $100 million dedicated to TV ads—to market the antihistamine Claritin to consumers. As a result, the company last year reaped $1.9 billion in sales of Claritin in the United States, a half-billion dollar jump from the year before.

And while the boom in direct-to-consumer advertising has been a bonanza for Wall Street and Madison Avenue, it has also sparked a surge in physician office visits. According to Scott-Levin, a drug marketing research firm in Newtown, Pa., while all office visits to doctors rose 2% during the first nine months of 1998, visits for conditions targeted by ad campaigns rose much more dramatically. Patient visits for smoking cessation rose 263%, for example, while visits to treat impotence jumped 113%, hair loss 30%, osteoporosis 22%, high cholesterol 19% and allergies 11%.

Effect on communication

Drug companies claim that advertising promotes consumer education and stimulates dialogue between physicians and patients—and some doctors agree. They say that patients are now more willing to discuss symptoms they've seen referred to in advertisements. "Most people are sophisticated enough to realize they're reading an ad," said Richard G. Williams, MD, an internist with the Greater Pinole Physicians Group in Pinole, Calif. "I haven't had anybody who is adamant that they're going to take Sports Illustrated's advice instead of mine."

But even more physicians say that TV commercials do not improve patient communication. Dr. Gutner from Massachusetts, for instance, said that only a minority of his patients—perhaps 20%—are really interested in discussing an advertised treatment beyond asking for a prescription. "The dialogue doesn't get to where I'd like to see it go," he said.

Instead, doctors are fielding requests. "It's altered the dynamics within the [exam] room," said Joseph G. Weigel, FACP, the College's Governor for the Kentucky Chapter. "Patients almost feel that the physician's office is the drive-through window at McDonald's where they put their order in and you fill it."

(In a position paper published last fall on direct-to-consumer advertising, the College stated its position that consumer advertising "does not constitute appropriate patient education"—though it conceded that the trend will not be reversed. The paper is available at

Other physicians complain that the drug industry's new reliance on television actually complicates their dialogue with patients. "When patients come in with a print ad, it's something I can touch and work with," said Joel S. Ross, FACP, a geriatrician with MedWise in Monmouth County, N.J. "But with television ads, they get this image that the products are going to be a panacea for their problems, and I don't have a printed word I can rebut or confirm."

In addition, time spent with the patient gets diverted from education to negotiation. When patients arrive with a specific medication in mind, doctors must first explain other, sometimes more effective, treatments. But when doctors try steering patients away from advertised treatments, they find that it's their credibility on the line, not the advertiser's. "Patients think, 'Oh, she's just prescribing this to save money,' " pointed out Bertha H. Safford, MD, a family physician in Ferndale, Wash.

Then, "depending on their insurance plan, you have to negotiate with them over what isn't covered and what is," continued Dr. Safford. And when a coveted drug isn't part of their health plan's formulary, patients may pressure physicians to make a case for medical necessity in hopes of getting the prescription covered—another round of hassle and effort.

"Patients are now suspicious that their doctor is withholding something they want," said cardiologist Thomas H. Lee, MD, medical director of Partners Community HealthCare Inc., a physician network of more than 900 primary care physicians in Boston. The result, according to Dr. Lee, is a subtle but chronic adversarial element in the doctor-patient relationship that takes a substantial emotional toll on physicians.

And there is evidence that physicians may be bowing to that pressure. Based on a survey conducted last spring, Prevention magazine estimated that 15.1 million consumers asked their physician for a medication they saw advertised, and that physicians honored those requests 80% of the time. That translates into 12.1 million prescriptions generated by consumer advertising.

Financial costs

Along with increasing frustration over patient demands, doctors are also feeling the financial fallout of consumer advertising. Partners Community HealthCare, for example, saw its pharmacy costs jump 10% last year—a real problem for its physicians, who are almost fully capitated for pharmacy costs. While those costs are accelerating, "the amount of money available to take care of patients hasn't gone up," Dr. Lee explained. Ultimately, he said, the money to pay for the increased volume of prescriptions is coming out of potential payments to hospitals and doctors.

To contain the damage done by consumer advertising, Partners has declared war on products being marketed directly to consumers. Different issues of its weekly physician newsletter, for instance, are focusing on advertised drugs and their less expensive counterparts. Dr. Lee said that many of the advertised drugs are fine products, but added that "there are equally effective, less expensive alternatives. We want to be sure our physicians know that these are not preferred drugs." Partners also plans to profile its physicians and their prescribing patterns, pressuring those who favor advertised drugs to switch to more cost-effective options, if they are available.

Partners also has full-time pharmacists detail drugs, instead of sales reps from drug companies that need to recoup consumer marketing costs. It is just one more move to encourage physicians to base prescriptions on medical effectiveness, not consumer demand. "Now that physicians are bearing some of the risk," Dr. Lee explained, "we're at the beginning of some real push-back against the pharmaceutical industry."

Monarch HealthCare, a 600-physician IPA in Orange County, Calif., is also trying to manage pharmacy costs because it bears half of the risk for pharmacy benefits. Internist James R. Selevan, MD, Monarch's chief information officer, explained that while the IPA was able to profitably manage its pharmacy risk just a few years ago, it is now losing $1.5 million a year.

A major problem, Dr. Selevan said, is that health plans set inadequate per member/per month pharmacy rates. One of the plans Monarch contracts with, for example, hasn't raised its pharmacy reimbursements since 1994. As a result, Monarch is trying to negotiate some of its pharmacy risk back to health plans, and—along with other competing physician groups in Orange County—is choosing not to renew some contracts.

An even more fundamental problem, said Dr. Selevan, is unrealistic consumer expectations of unrestricted drug coverage. Consumers are going to have to share the cost, many health plans and employers conclude as they watch drug costs continue to rise between 15% and 20% a year, in part because of the sales volume generated by consumer marketing. According to Perry Cohen, PharmD, of The Pharmacy Group, LLC, a consulting group in Glastonbury, Conn., pharmacy costs will consume 16% of total health care dollars in the year 2000, up from 4% in 1980. As a result, Dr. Cohen said, pharmacy management "is now a higher priority on a lot of people's radar screen."

Analysts say there are four basic strategies for pharmacy management. First is implementing cost management programs that target physicians. With cost management, health plans attempt to manage what physicians prescribe, mandating prior authorization for newer, more expensive treatments. Cost management programs can be effective if doctors get to share in the savings achieved; otherwise, physicians will find themselves where they are now: squeezed between consumer and insurer demands.

A second strategy is to increase health insurance premiums, and analysts are already predicting 9% premium increases next year, due largely to skyrocketing drug costs. But many health plans and employers are increasingly looking to two other approaches in order to manage pharmacy costs: re-designing their pharmacy benefits program to determine which drugs will, or will not, be covered; and increasing prescription cost-sharing by members.

Last year, for example, Kaiser Permanente in Oakland, Calif., announced that it would not include the impotence blockbuster Viagra, as well as other sexual dysfunction treatments, on its formulary. The HMO cited not only the high cost of such therapies but also the lack of any broad social benefits. Kaiser has excluded coverage in 12 states and the District of Columbia, but has been ordered to cover treatments in Connecticut, New York and California. In these states, the HMO has resorted to its cost-sharing plan B: making Viagra and other sexual dysfunction treatments available with a highly unusual 50% co-pay.

Other health plans are raising standard co-pay amounts, as well as creating different tiers of prescription coverage in order to pass more prescription costs onto members. UnitedHealthcare in Minneapolis, for example, introduced a system of three co-pay tiers in late 1997. The lowest co-pay is reserved for generic drugs on the plan's preferred drug list. The middle tier applies to brand drugs on that list, while the highest co-pay—up to $35—is used for brand drugs that are not preferred. The HMO's pharmaceutical and therapeutics committee meets quarterly to consider which drugs to add to, or knock off, its preferred list. Newly launched drugs being given blockbuster promotions may therefore spend at least a few months available only at the highest co-pay amount.

According to Phil Soucheray, UnitedHealthcare's manager of media and public relations, the tiered structure has held down the annual rise in the plan's pharmacy costs to 7%. He also noted that the co-pay tiers currently cover only 50% of its 8 million members and that the HMO hopes to have 100% enrollment by the end of this year.

While different coverage tiers provide the level of choice employers want, they also offer advantages for physicians. By providing some coverage for even drugs that aren't preferred, health plans are helping relieve some of the pressure patients are placing on doctors to make medical-necessity cases for uncovered drugs. That's one of the benefits cited by the Louisville, Ky.-based Humana Inc., which has introduced a similar tiered structure.

When deciding whether to include a drug on its formulary, thus making it available to members at the middle co-pay amount, Humana considers whether the drug is being advertised to consumers. Even more importantly, it determines if a drug is considered a first-line treatment. "When you have the combination of a second-line therapy being heavily DTC-ed, you see a lot of people jumping to that therapy right away," said Carol J. McCall, Humana's vice president of pharmacy management. "That particular combination would be a prime target for that highest tier."

While higher co-pays and tiered structures clearly save money for insurers and employers, health plans claim they also stimulate patient-physician dialogue about the effectiveness of different treatments. And, Ms. McCall pointed out, different co-pays help align the financial interests of health plans and doctors, particularly when physicians take pharmacy risk. "The only interests not being served are those of the manufacturer," she said, "but that's OK."

The goal is to take some of the heat off doctors by making patients aware of, and financially responsible for, the economic repercussions of their requests, with the hope that million-dollar promotions might start to lose their appeal. Some fear, however, that as health plans tighten drug lists and shift costs to consumers, drug companies will face the even greater challenge of persuading patients to try specific brand names.

In the meantime, regulations will probably not provide any relief. The FDA is expected to issue a final guidance on consumer drug advertising later this year, but analysts say it shouldn't contain any surprises. Despite protests from physicians and the College's recommendation that the FDA should screen commercials before they're released, FDA officials say that the current system is working as planned.

While 30 different drug products have been marketed to consumers since August,1997, the agency has filed only two "warning" letters requiring corrective action. "For the most part, the system has not led to major abuses," said Nancy M. Ostrove, PhD, chief of marketing practices and communications for the FDA. "The pharmaceutical industry is acting fairly responsibly."

Despite the boom in consumer ads, doctors are still king

Although drug companies are pouring big dollars into consumer advertising, they're not pulling back from efforts to get physicians' attention. In fact, they are spending even more to convince physicians to prescribe their products.

Drugmakers devoted nearly half a billion dollars to television commercials during the first nine months of 1998—but they spent more than five times as much, or $2.7 billion, on sales and promotional efforts to office-based physicians. That number represented an almost 23% increase from the first three quarters of 1997, according to IMS Health, a health care information company in Plymouth Meeting, Pa. (Complete figures for 1998 were not available at press time.) And according to figures from Scott-Levin, a health care consulting firm based in Newtown, Pa., drug companies spent another $1 billion in 1998 to host marketing events directed at physicians.

There was a slight decline in medical journal advertising in the first nine months of 1998, according to IMS Health: Spending on journal ads dipped $24 million, or 5.5%, from the same period the previous year. But analysts say that much of that money may simply have been diverted to other promotional efforts that target physicians. Some money for journal ads, for example, may have been re-apportioned to the drug companies' sales force, which grew from 35,000 representatives in 1994 to more than 56,000 in 1998, according to Scott-Levin.

Drug companies have good reason to hedge their bets when it comes to consumer advertising. In 1997, for example, Bristol-Myers Squibb spent $66.5 million promoting its cholesterol-lowering drug Pravachol to consumers, only to discover that public response was flat. "Consumers still didn't have any idea of the name of the product or what it was for," explained Julie A. Kline, a market analyst for Scott-Levin. As a result, Bristol-Myers Squibb now promotes Pravachol exclusively to physicians, primarily through symposia and physician meetings.

"The smart advertisers are certainly not going to abandon professional advertising," said Jack E. Angel, executive director of the Coalition for Healthcare Communication in Greenwich, Conn. When coordinated with consumer campaigns, professional advertising helps alert doctors to what Mr. Angel called "the surge" of consumer ads, preparing physicians for the questions they'll face from patients wooed by consumer marketing.

And while drug makers still devote billions of dollars each year to traditional office-based promotions, they are boosting their spending on physician meetings and events. As more and more drugs come on the market—and HMOs tighten their formularies to hold down pharmacy costs—drug companies are willing to pay handsomely to get physicians' attention for more than a two-minute office visit. Conferences deliver "a targeted audience and [drug companies] can use [doctors] for a sounding board," said Jennifer L. Diviny, another market research analyst with Scott-Levin. "There are definitely more vehicles of promotion right now."

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