Question

In: Economics

The FDA lifted restrictions on TV ads for prescription drugs in 1997, allowing manufacturers to advertise...

The FDA lifted restrictions on TV ads for prescription drugs in 1997, allowing manufacturers to advertise drugs without including lengthy disclaimers explaining the often numerous side effects. How has this regulatory change affected the market for pharmaceuticals? Why do you think so much more money is spent on marketing drugs than on marketing surgery or psychotherapy?

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Expert Solution

FDA's role as drug regulator and its impact on competitiveness in the pharmaceutical industry is very important.Drug prices are not directly controlled by FDA but the FDA 's action of not including disclaimer may affect the pharmaceutical industry.The agency's action may have impact on access to medicine and consumer welfare.When manufacturers advertise drugs without disclaimer , the sales in the market will decrease as disclaimers give full information about the product.Ads should not not be deceptive.Disclaimer is a legal requirement and without it may be penalized. a product .

Much money is spent on advertising drugs . In 1997 pharmaceutical companies spent $1.3 billion in drug advertisement and this has increased to 6 billion in 2016. This is done because drug sales may increase as a result of advertisement particularly when lay audience is targeted.Except US and Newzealand many countries have banned drug advertisement.In US the rules made by FDA to mention the risk associated with drugs, while advertising , are not strongly enforced. So much money spent on ads bring more revenue by increasing sales.


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