The health care industry in the United States has doubled its spending on advertising its products and services over the past two decades.
From $17.7 billion in 1997, a new study revealed that companies now spend up to $29.9 billion a year to compete to get a bigger share of the world's biggest health care market. Researchers believe that the astronomical amount of money spent on advertising alone contributes to why products and services are expensive in the United States.
"Whenever pharma or a hospital spends money on advertising, we the patients pay for it — through higher prices for drugs and hospital services," explained Shannon Brownlee, the senior vice president of the Lown Institute, a nonprofit that advocates for affordable care. "Marketing is built into the cost of care."
The findings were published in the journal JAMA Network.
Billions Spent On Marketing
For the study, the researchers analyzed data on consumer advertising, professional marketing, peer-reviewed medical and business journals, news articles, and other content published between 1997 and 2016. They found that expenditure for medical marketing of drugs, health services, laboratory testing, and disease awareness campaign reached $29.9 billion in 2016.
The most rapid increase was in direct-to-consumer advertising, which accounted for 32 percent of total spending or $9.6 billion. This includes television commercials which encourage viewers to "ask your doctor" about the product.
The majority of promotional spending goes toward marketing to health care professionals. About $20.3 billion goes to persuade doctors to use a certain product. This includes paying for food and drinks, speaking fees, and conferences.
"Marketing drives more testing. It drives more treatments," stated Steven Woloshin, co-author of the study. "It's a big part of why health care is so expensive, because it's the fancy, high-tech stuff things that get marketed."
The study also found that genetic tests, including the ones that trace ancestry, also increased advertising expenses to $82.6 million. AncestryDNA alone spent $38 million for ads in 2016.
Consequences Of Pharmaceutical Marketing
There are positive and negative consequences of advertising drugs and services. While it can destigmatize certain symptoms and diseases such as HIV, it can also raise false hopes in consumer by exaggerating the treatment that a product offers.
For example, some stem cell treatments have not been approved by the Food and Drug Administration. Angie Botto-van Bemden of the Arthritis Foundation warned that hundreds of clinics advertise unapproved stem cell therapies.