Health care and Advertising; The problems that arise in the field of Pharmaceuticals.
Health care and Advertising; The problems that arise in the field of Pharmaceuticals Intro Healthcare advertising and marketing is on the rise. Few healthcare providers even had marketing departments in the 1970’s. Now, even mainstream providers are investing in their images. Advertising often helps the consumer make choices amid a large number of options. But consumer patient choice is increasingly limited by managed care plans, adding a layer of irony to the spread of direct advertising. In this paper I would like to talk about advertising, specifically in the healthcare field, go over some the problems, and try to find solution to some of the problems in the industry, and try to express my opinions on the matter. What is Advertising Advertising is salesmanship. The only purpose of advertising is to make sales. It can either be profitable or unprofitable. It is any form of non-personal presentation and promotion of goods, ideas, or services by an identified sponsor. Advertising is used for business firms, non-profit organizations, professionals, and social agencies. Major decisions in advertising include objective setting, budget decisions, message, and media decisions, and campaign evaluation. It is a way of promoting products, services, or information. It is a way for business to communicate with consumers in a visual manor. It started in the 17th century with newspaper ads, and has erupted into a powerful trend in the economical world. Advertisings main objective is to communicate through great speed, through the use of single images, or words. Advertising is done through TV, bulletins, radio, TV, and other visual way of communication. Economics of Health Care advertising Healthcare is one of the hottest areas of ad growth but are also a relatively costly means of communication and may be less effective in achieving the goals of a health care organization than other forms of communication. Hospital, doctor, and insurance spending on major media ads, for example, grew 117 percent from 1992 to 1995. Among hospitals alone, aggregate marketing budgets hit 2.27 billion in 1995. Advertising took in 1.2 billion, a 490 percent increase since 1984, documented by the National Hospital Marketers survey. Average overall operating expenditures have risen from 26.9 million per hospital in 1984 to 61.1 million in 1994, a sizable yet considerably smaller-127 increase and the numbers are still growing. Steven Streiber, president of quality expectations, says that “hospitals to spend 0.5 to 1 percent of their total budgets on marketing“(Capital Analyst Health Addition). But the 0.4 of aggregate hospital budgets spent on marketing and advertising in 1984 rose to 1 percent in 1994. (CMS) Marketing budgets, therefore are on the rise for healthcare providers
overall expenses. The most recent data available in 2001 shows that prescription drug expenditures relative to national health care expenditures accounted for 140.6 billion in spending in 2001, and are on the growth of rising to 445.9 billion in 2012.(CMS,2002). So, a total of 14.5 of national health expenditures will be for prescription drugs. This is all relevant to advertising because of the fact that out of these expenses comes advertising. Spending on pharmaceuticals has accelerated greatly in recent years, and is now the fastest growing aspect of our health care budget. One can speculate as to how effective direct ...
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overall expenses. The most recent data available in 2001 shows that prescription drug expenditures relative to national health care expenditures accounted for 140.6 billion in spending in 2001, and are on the growth of rising to 445.9 billion in 2012.(CMS,2002). So, a total of 14.5 of national health expenditures will be for prescription drugs. This is all relevant to advertising because of the fact that out of these expenses comes advertising. Spending on pharmaceuticals has accelerated greatly in recent years, and is now the fastest growing aspect of our health care budget. One can speculate as to how effective direct marketing is to consumers who don’t pay for services directly. Between 1980, and 1994, healthcare expenditures paid out of pocket declined from 5 percent to 3 percent in hospitals, and 32 to 19 percent for physician care. Thus, trends are reducing incentives for individuals to shop for the best mix of cot and quality. According to IMS health, “spending on DTC advertising increased 47 percent in 1997, while spending on advertising to physicians was about 4 billion, which is four times more than to consumers.” Direct to consumer Prescription Drug Advertising Direct to consumer advertising is a way to get the prescription drug into the consumers perspective in a visual sense. According to the DTC, “advertising is a key means of informing, and empowering patients”. (Holmer,JD). In 1998, Prevention magazine did a study based on a national survey in 1998. In the survey it went on to state that “53 million consumers talked to their physicians about a medicine they saw advertised, and an additional 49 million sought information from another source, such as the internet“. Among those, 38 percent sought information from another source. Another 1997 study of US family physicians believed that “DTC advertising was not a good idea because they increase costs, and promote, misleading bias views of drugs”. What they mean when they say this is that the companies tend to make the advertisements sugar coated, and seem to focus on the positive aspects of the drug, rather then view both the positive and the negative aspects of the drug. Take for example. I had a friend who told me he was suffering from bad anxiety due to school, and his job. He said he seen a commercial for Paxil CR, and basically it portrayed the way he was feeling, and it seemed like the right drug for him. He then set up an appointment with his physician, and basically sat down with him and explained what he had to me. The physician then gave him a prescription of Paxil CR. Come to find out that the medicine triggered his anxiety even more, and since then he has gotten off the drug, and in the process has had serious side effects. The fact of the matter is that pharmaceutical companies do not tend to emphasize what the drug is really about, and many physicians do tend to give out prescription medicine like it is candy. According to AMA trustee William A. Jacott, MD, “physicians are increasingly feeling pressured by patients to prescribe a drug that they have seen advertised”. Problems that Occur One of the problems is the conflict over the prescription of pharmaceuticals that arises between consumers and providers of managed healthcare.(Venture Capital Health Care edition). HMOs and other providers of managed healthcare typically charge consumers a fixed price and in return supply all of their other medical care, including prescription drugs. This moral hazard affects patients access to pharmaceuticals. Because HMOs bear the lions share of the cost of prescription drugs but receive only a fraction of the benefit, they do not have the correct incentive to provide the drugs that are optimal from the consumers point of view. Instead they may seek to minimize their expenditures on pharmaceuticals. In 1996, 24.4 percent of HMOs offered financial incentives to physicians to encourage them to reduce the cost of medication(CMS2004). One of the main problems dealing with this is healthcare providers tend to conceal information about drugs that are available to members of HMO. Also, if consumers to not recognize the benefit’s they receive from different prescription drugs, the HMOs have an incentive to offer the cheapest drugs rather than the drugs that receive the largest net benefit. Consumers must always have an understanding of what cost effective medicines are available due to the fact that if consumers are unable to verify whether the healthcare provider fulfilled its promise to provide the most cost-effective medicines, they cannot retaliate against the provider that cheated them. Although consumers are initially unaware of the benefits that they may or may not receive from different drugs, a drugs manufacturer can use advertising to inform consumers about its product. For example, from an economic standpoint, The competitive producers of drug A would never to choose to advertise. These firms must price at marginal cost and would therefore never recover the cost of advertising. The producer of drug B however, may wish to advertise since it has a monopoly over the production of drug B and can choose a price that exceeds its marginal cost. Because of the expected benefit that drug B shows from advertising, consumers will be more drawn to it if their HMO provides it. These are some of the problems that occur with advertising, and it affects us in a health, as well as an economic standpoint. HMOs tend to only worry about making a profit, other than offer you as a consumer the best type of care, or best type of medicine available, rather they offer you the cheapest care, or medicine in order to make a profit. Mainly this is due to government regulation, and the budgets of these Health Care plans. “The debate over patients rights legislation reflects a fundamental failure in the HMO system”, according to Richard parker (Medical Link), who recently wrote an article on HMOs and patients rights. With Medicare, and Medicaid in the 1960s, HMO and government made it seem like they were giving our free health care with no additional costs or strings attached. But while the demand for these services increased, so did skyrocketing costs. So basically due to the demand for cutting costs, they began to minimize the care provided. The rational with HMOs is that the concept used to be the more services an ad campaign such as HMOs whose ad campaigns once seemed so glorious, including medicine, could draw, the more services provided. But the moral of the story is the exact opposite. Now the governments solution to the problem is to withhold their services as much as possible. Who Pays Another concern to acknowledge is who and what healthcare providers advertising is reimbursed. It is obvious that most of these costs are related to Medicaid, or Medicare which are government funded, as we as taxpayers pay as well. Advertising costs are reimbursable for hospitals, HMO’s nursing homes, and home healthcare agencies, but the determination of which costs is a very grey area. Such costs that are under the HFCA are costs such as services related to patient care, telephone directory, and costs of activities involving professional contracts with physicians, hospitals, public health agencies, and other similar groups. Costs not included are costs of fund raising, including advertising, promotional, or publicity costs. Whose to say which or if any of these advertising expenses should be included or held reimbursable, but this is the way the government or the HFCA depicts them. In my opinion, I feel strongly that none of these advertisement costs should be reimbursed because of their such small role in better in making better healthcare standards. It is not that healthcare advertising should not exist, it is just it should not come out of taxpayers, as ourselves pockets. The bottom line is according to the American Hospital association is that “Health care organizations should be aware of applicable government regulations and restrictions on reimbursement for advertising expenditures”. Solutions to these problems Recently the American Society of Internal Medicine position(HoD)97 sought to eliminate product to specific direct to consumer advertising. In failing to do so, the ASIM then urged that DTC advertising be balanced and scientifically based. ASIM proposed direct-to consumer advertising of prescription drugs because of their misleading information on medicine. Now I am not saying that advertising in the pharmaceutical industry should be banned, but we must encourage them to be honest due to the consumers health, and well-being. a lot of this arises because of the FDAs negligence to administer pharmaceutical advertisements appropriately, and in a timely manner.(ACP online). Promotion, In my opinion does not exceed proper education. If we focus more on educating, rather than advertising these drugs, less of these problems would occur. A patient must develop a relationship with his physician, and vice versa, and not rely on advertising as a means of diagnosing problems, and prescribing medicine. Also, as stated in the ACP-ASIM, “they believe that the FDA must impose serious limits on the pharmaceutical industry to ensure that consumers receive complete information about the medicine they are receiving”. Their solution is that screening of all pharmaceutical advertisements. Also, government must eliminate HMOs, especially in the field of pharmaceuticals, and medicine. This would engage in “A free market system, which American has not intervened with in over 100 years“ (R. Parker,MD). This would allow patients to exercise their rights with medicine, and other medical choices as well. Conclusion Even if patients had complete freedom of choice, healthcare ads tend to have little informational value upon good and clear decision making as far as pharmaceuticals, choosing the right doctor or hospital has to concern, The bottom line is why should healthcare plans or taxpayers pay for these advertisements. Their purpose or intention is not needed under these set circumstances. I know in my opinion, as far as the cost and demand for these ads from an economic perspective is asinine. Health care and government need to spend more time and money on more important things such as new medicine , better buildings, and hospitals, and better care. It is my conclusion that that healthcare industry regulators are willing to accept advertising costs as a legitimate expense for providers, but seem not to have an adequate mechanism for determining just what and how. Like I stated earlier, it is not that healthcare advertising should not exist but things need to be changed such as clear, and cut advertising, better regulation of advertising, and private funded instead of government funded. Bingham A. Walter. Snake Oil Syndrome. Patent Medicine Advertising: Hanover, Mass. Christopher, 1994. CMS (2002) www.CMS.com Direct to consumer advertising. ACP online. October, 1998. Hansen. Han. Liberal Government spending in the U.S. Oct. 2003. HMOS and Patients Rights”: Rationing Medicine. Parker, Richard. July, 2001. Johnson. Donald. The Business Word. March 2004. Kennedy. Noel. The Victory principle. Jan. 2001 Zuckerman. Alan M. Competing on Excellence. Healthcare strategies for a Consumer Driven market. Nov. 2003 The Venture Capital Analyst Health Care Edition. Co. 2004 www.Healthcare advertising.com. Copyright 2004. www.texmed. Com . Practice Management: Advertising restrictions.
