CBO: Latest Snapshot of Pharma's Promotional Spending

While news outlets focus on pharma's investment in direct-to-consumer (DTC) advertising, the Congressional Budget Office reminds us that the drug industry spends heavily and increasingly on sales-rep detailing (despite the notable rep layoffs).

Promotional Spending by Type of Marketing Activity, 1989-2008

Released Tuesday, the CBO report (found here) provides the following expenditure data for the US pharmaceutical industry in 2008.

Last year, promotional expenditures equaled about 11% of domestic sales ($189 billion)—a percentage that is consistent with those recorded since the early 1990s (10%-12%), the CBO reports.

The CBO also notes that the growth of pharma's overall promotional spending has flattened considerably since 2003 and 2004, when marketing expenditures grew annually at a "double-digit" pace. The decline is probably related to fewer drug approvals and generic competition, the Office speculates.

The favored medium for DTC spending remains television, while Internet advertising (eg, banner ads) takes up a sliver (~4%) of the DTC pie.

The question of whether DTC efforts translate into increased sales remains unanswered. The CBO cites Bradford et al and Law et al, who report conflicting data. A more recent, longitudinal study by Law et al indicates that DTC advertising had no effect on the increasing rate of clopidogrel (Plavix) prescriptions for Medicaid recipients.

* Sum exceeds 100% because of rounding.