Megan McArdle had a well argued series of posts recently arguing that we need to maintain high profits for pharmaceutical companies in the United States in order to promote research. Here’s the Ezra Klein response. I’m not going to take on the debate directly, but I would suspect that all sides to the party would be bothered by the way direct to consumer advertising has worked for the past decade (I believe it was legalized for TV in 1997–making the United States one of two nations to allow prescription drug advertising).
It turns out that the Lipitor commercials you may have seen–the ones that feature an inventor of the artificial heart–are coming under fire, since he appears as a doctor, but isn’t a cardiologist. Also, he is depicted as rowing a boat, even though he apparently never rows and is neither particularly active or fit. It’s almost cute how the NYTimes paints a tone of outrage. Upon reflection, I don’t think I even tacitly assume that the people depicted in a commercial are doing anything but playing parts, even if they appear in propria persona. But while that’s a norm for commercials, it’s a really bad thing when those commercials are peddling prescription drugs. It’s hard to see a rationale for such advertising.
Like all advertising, prescription drug commercials do precious little to inform folks. A typical aim is to prop up brand name pharmaceuticals that are being threatened by generics, as the Times article makes clear. They do this while having the distortionary effect of promoting overconsumption of prescription drugs, at a very high economic cost. Even if you bought McArdle’s line that the high profits are necessary to promote research, we’d be better off extending the patents drug companies are given, to allow them to recoup costs in a more socially productive manner without the competition of generics. Let’s say I’m skeptical, but I didn’t set out to write that post.