Prescription drug spending increased at an annual rate of 18 percent from 1997 through 2001 and is the fastest growing component of health care spending in the United States. Among the many reasons cited for this increase are growth in the number of patients diagnosed with conditions that can be treated with pharmaceuticals and the development of innovative drugs for some conditions. Spending on direct-to-consumer (DTC) advertising of prescription drugs has tripled in recent years. The Food and Drug Administration (FDA) regulates the promotion of prescription drugs, including the content of DTC advertisements, under the authority of the Federal Food, Drug and Cosmetic Act. The act sets general standards of for FDA's regulation of prescription drug advertising directed to consumers and physicians. Regulations implementing the act require that advertisements present accurate information and fairly represent both the benefits and the risks of the advertised drug. Pharmaceutical companies spend more on research and development initiatives than on all drug promotion activities, including DTC advertising. According to industry estimates, pharmaceutical companies spent $30.3 billion on research and development and $19.1 billion on all promotional activities, which includes $2.7 billion on DTC advertising, in 2001. DTC advertising appears to increase prescription drug spending and utilization. Drugs that are promoted directly to consumers often are among the best selling drugs, and sales for DTC-advertised drugs have increased faster than sales for drugs that are not heavily advertised to consumers. Although generally effective at halting the dissemination of advertisements it reviews and identifies as misleading, FDA's oversight of DTC advertising has limitations. FDA issues regulatory letters for a small percentage of the advertisements it reviews. Pharmaceutical companies that have received regulatory letters have invariably ceased dissemination of the misleading advertisement. However, FDA's oversight has not prevented some pharmaceutical companies from repeatedly disseminating new misleading advertisements for the same drug, and some pharmaceutical companies have failed to submit all newly disseminated advertisements to FDA for review.
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