Research Stories

by Carrie Barnett

Anyone who watches television in the United States might logically conclude that this is a nation plagued by allergies, depression and arthritis. Ads for medicines to address such conditions make it seem as though ailment sufferers outnumber the healthy. But, it wasn't always so.

The media deluge of disorders didn't begin until 1997 when the Food and Drug Administration opened the airwaves to advertisements for prescription medications by allowing pharmaceutical companies to broadcast a drug's name, the troubles it targeted and a short list of the most critical risks.

Promotional spending by pharmaceutical companies rose from "9.2 billion in 1996 to $19.1 billion in 2001, an average annual increase of 16 percent," noted a 2003 Kaiser Family Foundation study.

This past January, two researchers from York University in Toronto, Canada concluded that the U. S. pharmaceutical industry spent 24.4 percent of its sales-dollar volume on promotion, but only 13.4 percent on research and development during 2004. According to ABC News, dollars spent on direct-to-consumer advertising (DTCA) in 2007 totaled $4.8 billion.

Can advertising increase patient demands, physician prescribing and overall costs? Research indicates that it already has.

What's more, DTCA has grown beyond the pharmaceutical sector and now promotes orthopedic devices. Will such advertising drive demand for orthopedic surgery? Will patients ask for specific knee or hip implants? And, what will be the effect on medical costs? These are some of the questions now being investigated by physicians and scholars across the U.S.

Bitter pill?
"Opinions differ on the value of DTCA," says Natalia Wilson, a physician who holds a master of public health degree and who is a researcher in the School of Health Management and Policy at the W. P. Carey School of Business.

"Proponents of DTCA say it educates healthcare consumers and allows them to be more active participants in their healthcare," notes Kevin Bozic, M.D., an assistant professor of orthopedic surgery at the University of California, San Francisco. According to him, DTCA supporters also claim the advertising "calls attention to untreated diseases, gets people in to see the doctor and encourages compliance."

Still, analysts see drawbacks. Bias is one.

DTCA fails to "cover all the things the patient needs to know," Wilson maintains. DTCA "tends to minimize risks and adverse side effects."

Bozic has studied the phenomenon and, in a paper entitled "Direct to Consumer Advertising in Healthcare," he summarizes a number of studies, many of which support Wilson's views.

In one, four out of five physician respondents felt DTCA presented unbalanced information that prompted patients to seek unneeded treatments.

Patients, however, trust the information. "A recent study found that approximately 50 percent of patients thought direct-to-consumer advertisements had to be submitted and approved by the government for prior approval," Bozic wrote in his paper. He also cites a Kaiser study that indicated some 64 percent of consumers trusted the information in DTCA.

In reality, the FDA doesn't preview the ads and, if one is non-compliant with guidelines, the agency simply sends a cease-and-desist letter. The FDA has not used this approach often in response to pharmaceutical advertising, however, and the agency has done even less with advertising for implants.

"The current oversight in this area is not strict," Wilson says.

In this corner
The ads also can cause friction between doctor and patient, Wilson notes. From her years practicing medicine, she says physicians desire a "relationship with the patent built on trust and respect." DTCA-prompted requests can "set up a difficult dynamic" between the physician and patient.

According to Bozic, relationships can suffer when, as some doctors have stated, patients treat the doctor's office like "a drive-thru window at McDonald's, where you put in your order and the doctor should fill it."

His work references several studies, including one 1999 survey of households that asked patients to anticipate how they would feel if a request for a specific medication was refused by a physician. Some 46 percent said they'd feel "disappointed." Another 15 percent said the blow would be enough to make them seek out a different doctor.

As it turns out, a 2003 study indicates these patients might not have to go doctor shopping. In a random survey of consumers, 86 percent of participants recalled seeing a DTC ad, and 35 percent talked to their doctors about one. Some 75 percent of those who engaged in a DTCA doctor visit walked away with a prescription for the medication requested. In still another 2003 study, Sacramento, California-based physicians said "yes" to prescription appeals from 78 percent of their patients seeking drugs based on DTC ads.

On the orthopedic front, Bozic and a team of other researchers conducted a study which concluded that "doctors found it inconvenient when patients came in armed with information requesting a different procedure or technique. It took valuable time in their office explaining why that technique or procedure isn't appropriate."

In his own practice, he offers this example: Hip resurfacing, he explains, is a newer type of arthroplasty intended for "younger, active patients with good bone quality. In older patients with poor bone quality, there are higher risks of complications, and hip replacement is much more appropriate."

Still, he has seen a number of patients who are not good candidates for resurfacing request the procedure anyway. "I have to explain to them that it's not appropriate for their specific circumstance because it puts them at higher risk."

In fact, Bozic conducted a study on the impact of DTCA on orthopedics, and discovered that he's not the only orthopedic surgeon around who feels the advertising's effects. In his research, 37 percent of patients felt better informed, but only 5 percent of physicians perceived their DTCA-educated patients as being truly better educated, particularly when it came to understanding risks and benefits of arthroplasty surgery. Some 77 percent of doctors felt the DTCA patients were misinformed, and another 84 percent felt the patients had unrealistic expectations.

On one knee
With the exception of Bozic's, much of the research on the effects of DTCA in the health sector has focused on the pharmaceutical world. As this type of advertising starts to address implants and medical devices, some wonder if it could drive demand and costs up for those, too.

When considering the potential effects of DTCA, there are important differences to consider between pharmaceuticals and medical devices, Natalia Wilson notes. "You can stop a medicine if it doesn't work well. But, once an implant is in, it's in. An implant isn't something you want to take out unless you have to." Physician decisions surrounding implant choice involve many issues, including what is clinically appropriate for the patient and their expertise with a particular implant, she said.

One possible impact, she notes, is that DTC ads may "reach out to people who have a knee or hip problem, but are not currently seeking care." The advertising might drive them to seek medical and and ultimately increase "the volume of patients who are getting knee and hip implants."

She points to the active baby boomers. "There are a lot of people in this group who may be 50-year-old ex-marathon runners or other recreational athletes." These people may need joint replacements at a younger age than those who had such surgeries in years past.

The cost of coaxing
To investigate whether DTCA would impact implant surgeries, Wilson teamed with the W. P. Carey School's Eugene Schneller, a professor of supply-chain initiatives in the School of Health Management and Policy. Together, the two scholars conducted focus-group research with supply chain professionals from three hospital systems.

"Our real interest has been to look at the awareness that hospitals have with DTCA and try to understand how they might have adjusted some of their choice of materials as a result of it," Schneller explains. "We found, in general, that hospital staffs were generally unaware of DTCA."

One reason customer demand isn't pushing product choice may be because, as Bozic found, physicians are deflecting the consumer product requests. Schneller explains that "if doctors are successfully steering patients to the products that they have implanted in the past, or if the hospital provides the patient's choice of products, patient requests do not really affect the hospital."

"It is curious, however, that in other industries suppliers and those who pay for the products would be working closely together to achieve alignment," he added. Schneller points out that "with the physician as an intermediary, this does not seem to be the case. Physicians, suppliers, insurance companies and hospitals all seem to be working independently."

Schneller goes on to explain that regardless of who makes the choice, there are important costs associated with implants. For one thing, devices increase costs overall.

What's more, the cost of implants rose 132 percent between 1991 and 2004, but the increase in hospital payment was only 16 percent, Schneller says. As a result, "there are many cases where the hospital actually loses money when it puts a costly device into a patient."

What are the consequences? To deal with this unprofitable trend in implants, hospitals "could shift cost, or they could decide not to take on certain procedures," Schneller notes. That would be unfortunate, he points out, since these procedures improve the quality of life for so many people.

And what about the doctors who perform the procedures? Will they be indignant if hospitals don't take such patients on? Maybe not. According to Schneller, there was a 35 percent decrease in physician reimbursement for implanting devices between 1991 and 2004. "There is a growing concern, particularly for some procedures, that physicians will not want to do them," he says.

Even if hospitals and doctors do continue to perform implant surgeries, a DTCA-driven increase in such procedures could affect all U.S. citizens. As Schneller points out, knee and hip implants often go to older patients, a group the baby boomers are beginning to join, so demand may rise naturally. What's more, Medicare now pays for 50 percent to 60 percent of hip replacements, he says. And, the baby boomers are just starting to enroll. But a good part of the growth in demand will come from younger and younger patients who see the devices as life and performance enhancing opportunities.

Given the evidence that DTC advertising has spurred increased demand for prescription pharmaceuticals, medical-device advertising doesn't bode well for rising U.S. healthcare costs.

It's enough to give you a persistent headache.

Bottom Line:

• Ads for physician-prescribed drugs have driven demand increases among younger consumers.


• Ads touting medical devices like hip and knee implants now are targeting patients—the ultimate consumers.


• Surgical implants are more permanent, expensive and complicated treatment options than medications.


• Some worry the implant ads will push inappropriate utilization and costs even higher.

Read more about business research at ASU at Knowledge @ W.P. Carey