America’s Health Care Industry Marketing Strategy
Spending by companies in the American health care industry increased considerably over the past 20 years. A new study showed money spend on advertising and promotions increased by almost 100 percent during the period.
The new research, which focused on only some of the ways companies in the healthcare industry push their products to consumers, showed that spending on marketing almost doubled between 1997 and 2016. It was found that annual spending jumped from $17.7 to $29.9 billion during the period.
The reported increase in marketing spending was greatly influenced by expenditure on direct-to-consumer (DTC) advertisements promoting prescription medications. This soared from $2.1 billion in 1997 to $9.6 billion in 2016, increasing by about 350 percent over the period.
However, DTC didn’t account for the most part of the total annual spending; marketing to health professionals did. This rose to $20.3 billion, up from $15.6 billion.
Findings from the new study were published in the journal JAMA on Oct. 8.
Contributor to rising healthcare costs
Advertising is good. Apart from helping companies to sell and make profits, it also has some other benefits. It, for instance, assists in dealing with the stigma attached to having certain medical conditions.
But it is thought that marketing strategies by companies in the healthcare industry have the potential to make consumers have fears about certain diseases. These could make some people request costly treatments and examinations they do not really require.
The researchers who conducted the study thought along this line.
“Marketing drives more testing,” explained co-author Steven Woloshin. “It drives more treatment.”
Woloshin, a director at the Center for Medicine and Media at the Dartmouth Institute for Health Policy and Clinical Practice, noted that spending on marketing is a major reason for rising healthcare costs. This is because companies mostly promote products that tend to be costly.
According to NBC News, Diana Zuckerman, president of the non-profit National Center for Health Research, said these ads, which “can be amazingly persuasive,” have the potential to exploit patients and their loved ones.
“This can lead to overdiagnosis, overtreatment (with associated harms), and wasted resources,” Woloshin noted in an email to Reuters.
Taxpayers bear the brunt
Companies in the healthcare industry are always doing all they can to outdo the competition. Their marketing efforts are not targeted directly at the consumer or patient in many cases. Rather, they target professionals in charge of prescription and purchasing.
According to the study, pharmaceutical companies spend a considerable amount of money to influence doctors. They take care of their refreshment and give them travel allowances and speaking fees.
The higher costs of health care that results from the different marketing tactics are borne mainly by the taxpayers, according to experts and consumer advocates.
Persuasive marketing causes doctors and patients to request tests that are expensive. It also leads to ordering costly, brand-name medications.
To protect themselves against higher costs, insurers will increase premiums. This has serious implications for insurance programs funded by taxpayers, such as Medicare.
Woloshin revealed that annual marketing spending by the healthcare industry was way beyond a budget of roughly $5 billion for the U.S. Food and Drug Administration (FDA), which monitors the companies there.
The spending is about the same as the budget for the National Institutes of Health (NIH), America’s primary agency for medical research, and one of the best in the world.
Yet, the study only took into account marketing spending on prescription pills, laboratory tests, health services, and disease awareness campaigns. This means the industry spends more than the reported amount in a year.
Lobbying campaigns, marketing research, medical meetings, and online promotions are just some of the other aspects that were not considered in the study.
- Health care industry spends $30 billion a year on marketing
- U.S. health care industry spends $30 billion a year on marketing