The Cost of Drug Ads

Drug advertising is costing American taxpayers.

Canadian researchers found the price of Plavix, a blood-thinning medication sold by Sanofi-Aventis SA and Bristol-Myers Squibb Co., shot up after the drug was advertised on television. The price of the drug jumped even though usage of the medicine didn't increase after the commercials. The drug was chosen for the study because it was sold for three years prior to consumer ads on TV beginning in 2001, the researchers say in an article published in Archives of Internal Medicine this week.

To recoup costs for advertising, the researchers concluded that the drug companies raised prices. The higher price added more than $200 million in additional reimbursement from Medicaid, the government's health plan for low-income people, the researchers found.

"Pharmaceutical companies need to recuperate the costs of the advertising through either increased sales or higher prices," Michael Law, a health policy researcher at the University of British Columbia, says. "The timing of this price increase raises important questions about whether it was related to the $350 million spent advertising (the drug) through 2005."

The study comes on the heels of research recently completed by University of Minnesota pharmaceutical economist Stephen Schondelmeyer, who found brand-name drugs often taken by Medicare patients rose more than 9 percent in the last year, while consumer prices overall fell 1.3 percent.