US Health Care Industry Spends $30B Per Year on Marketing

The US health care market is valued at roughly $3.5 trillion so it is no wonder companies are always looking to develop the next big product. These products, of course, tend to come in the form of extremely high-priced prescriptions.  But in order to get you to spend your hard-earned dollars on these drug products, the medical industry spends about $30 billion every year on marketing.  

In a recent study, which has been published in JAMA, researchers also say that US spending on health care marketing nearly doubled between 1997 and 2016.  This may seem like a big jump, and a lot of money, but study co-author Steven Woloshin comments on why marketing is very important.  

The co-director of the Dartmouth University Institute for Health and Clinical Practice Center for Medicine and Media says, “Marketing drives more testing. It drives more treatments.  It’s a big part of why health care is so expensive because it’s the fancy, high-tech stuff things that get marketed.”

As a matter of fact, marketing does quite a bit more than drive more testing.  Advertising is not just about persuading people to pick one particular brand of medicine over another brand.  More importantly, Woloshin notes, the more sophisticated marketing campaigns actually convince people that they should be worried about diseases they probably do not have and to request their doctor prescribe them drugs or exams that they probably do not need.

And this is definitely not good for patients.  Indeed, Shannon Brownlee advises that the real victims are taxpayers.  The senior vice president of the affordable care advocacy nonprofit Lown Institute comments, “Whenever pharma or a hospital spends money on advertising, we the patients pay for it—through higher prices for drugs and hospital services. 

Ultimately, these high costs affect everyone because they lead to insurance companies increasing premiums.  And its not just your premium—it is everyone’s premiums!

But pharmaceutical industry group PhRMA spokeswoman Holly Campbell counters that these ads provide patients with “scientifically accurate information [which] increase awareness of the benefits and risks of new medicines and encourage appropriate use of medicines.”

Either way, medical marketing’s biggest increase in the past two decades was in “direct-to-consumer” advertising. This includes things like television commercials and radio spots that specifically instruct patients to “ask your doctor about” whatever drug they are trying to sell. Spending for ads like these increased from $2.1 billion in 1997 to almost $10 billion in 2016.