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Drugs With Direct-to-Consumer Advertising Make up More Than Half of the Total Amount Spent on Prescriptions by Medicare and People with Medicare

A recent Government Accountability Office (GAO) report found that of the $560 billion that Medicare and people with Medicare spent on prescription drugs from 2016-2018, more than half was spent on drugs that were advertised. The report also looked at what types of medications were advertised most often and found that two-thirds of advertisers’ spending focused on just 39 drugs, half went to promote newly marketed drugs, and nearly half centered on drugs to treat chronic conditions. 

The report looked at Medicare and beneficiary spending on medications covered by both Part D and Part B and found that of the top 10 drugs with the highest Medicare expenditures, four were also among the top 10 drugs in terms of direct-to-consumer advertising spending, including a blood thinner, an arthritis medication, a cancer treatment, and a pain management medication. 

Though this overlap, as well as changes to beneficiary use and increases in advertising at particular times, suggests that advertising may contribute to a drug’s use and spending amounts by people with Medicare, the report also notes that other factors likely contribute to those changes. For example, the GAO review found that increases in unit prices, prescriber decision-making, and promotions directed to prescribers may also impact beneficiary use and spending on certain drugs. 

The findings raise questions about direct-to-consumer advertising’s impact on Medicare spending and drug utilization. The U.S. is one of the only countries in the world that allow direct-to-consumer advertising of prescription drug products, and it is a controversial policy. Groups, including the American Medical Association, have determined that the policy is having a negative impact and driving increased drug prices. 

Read the full GAO report here.

Policy Issues: Prescription Drugs
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