State of Illinois
92nd General Assembly
Legislation

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92_HR0303

 
                                              LRB9208865DJgcC

 1                          HOUSE RESOLUTION

 2        WHEREAS,  More than almost all other consumer  purchases,
 3    the ability to purchase medications has a direct, discernible
 4    impact on the health and life of this State's citizens; and

 5        WHEREAS,  A  substantial  and  significant portion of the
 6    prescription drug price and cost  to  the  consumer  and  the
 7    State    is    represented   by   advertising,   particularly
 8    direct-to-consumer advertising; and

 9        WHEREAS,  The  National   Institute   for   Health   Care
10    Management   has   reported   that  "...  prescription  drugs
11    advertised directly to consumers are the largest and  fastest
12    selling medicines.  They contributed significantly to the 19%
13    increase     in     pharmaceutical    spending    in    1999.
14    Direct-to-consumer advertising accounted for 27% of the  $6.6
15    billion   drug   companies  spent  directly  promoting  their
16    products.  Mass media  advertising  was  22%  of  all  direct
17    promotion expenses in 1998 compared to 10% in 1995 ..."; and

18        WHEREAS,    This   marked   increase   in   spending   by
19    pharmaceutical     companies     and     distributors     for
20    direct-to-consumer advertising began with the  relaxation  of
21    federal  regulations  in 1997.  In 1999, drug companies spent
22    $1.8 billion on mass media advertising,  up  38.5%  from  the
23    amount  spent  in  1998 and 33 times the $55 million spent on
24    mass media in 1991.  The  drug  industry  has  increased  its
25    direct-to-consumer  ad  spending by 40% per year.  Television
26    ads accounted  for  70%  --  $1.1  billion  --  of  the  1998
27    spending.  At the current pace, all ad  spending was expected
28    to exceed $2 billion in 2000; and

29        WHEREAS,  Some  drug  companies  are now spending more of
30    their revenue on advertising, marketing,  and  administrative
31    costs  than  on  research.   According  to  Public  Citizen's
32    Congress  Watch,  Fortune 500 drug companies allocated 17% of
 
                            -2-               LRB9208865DJgcC
 1    their revenue into profits last year and 30%  into  marketing
 2    and  administration,  but  spent  just  12%  on  research and
 3    development.   The  National  Institute   for   Health   Care
 4    Management reports that this increase in consumer advertising
 5    could  be  responsible  for  25%  of  the  recent increase in
 6    prescription drug spending.  There is  growing  concern  that
 7    this  priority  on  advertising is short-changing new product
 8    research and development and may be  confusing  to  consumers
 9    and affecting their relationships with health care providers.
10    As  a  result, the U.S. Food and Drug Administration (FDA) is
11    planning a study to determine whether these ads  are  causing
12    more   harm  than  good.   The  FDA  will  be  reviewing  its
13    direct-to-consumer advertising policy to determine whether it
14    should be changed, rescinded, or kept in place; and

15        WHEREAS,  This  excessive  advertising  may   result   in
16    consumers  making  inappropriate  demands for newer, costlier
17    medicines, when less  expensive  drugs  may  be  as  or  more
18    appropriate; and

19        WHEREAS,    Health   insurance   companies   claim   that
20    direct-to-consumer advertising motivates consumers to  go  to
21    the  doctor to ask for more expensive drugs than necessary or
22    for unnecessary drugs, which, in turn, is responsible in part
23    for large increases in health insurance premiums; and

24        WHEREAS, There are no accurate reported figures  on  what
25    pharmaceutical    companies   and   distributors   spend   on
26    advertising; and

27        WHEREAS, Researchers have indicated that  assumptions  of
28    the  amount  of  advertising  are based on extrapolation from
29    data in the public domain since they were  unable  to  obtain
30    data directly from the pharmaceutical companies; and

31        WHEREAS,  The  State  of Illinois is a major purchaser of
32    prescription medications amounting to nearly $1.5 billion per
 
                            -3-               LRB9208865DJgcC
 1    year,  and  the   spiralling   cost   of   direct-to-consumer
 2    advertising   is   contributing   to  the  State's  excessive
 3    prescription drug liability, so the State  has  a  compelling
 4    interest in controlling drug costs; and

 5        WHEREAS,  Pharmaceutical  companies claim that any action
 6    by the government to deal with those  increasing  prices  and
 7    costs will have a negative impact on their capacity to engage
 8    in vital research and development; and

 9        WHEREAS,  The House of Representatives needs data that is
10    reliable and  valid  to  evaluate  the  competing  claims  of
11    consumer groups and the pharmaceutical companies; and

12        WHEREAS, The House of Representatives has determined that
13    it  must require pharmaceutical companies and distributors to
14    provide data through the disclosure of their expenditures for
15    mass media direct-to-consumer advertising and  correspondence
16    to consumers; and

17        WHEREAS,   The  Illinois  Health  Care  Cost  Containment
18    Council was established to contain health care costs  and  to
19    identify   appropriate   utilization  practices  through  the
20    collection  and   dissemination   of   data   obtained   from
21    appropriate sources; and

22        WHEREAS,   The  Illinois  Health  Care  Cost  Containment
23    Council is authorized to collect data and provide reports  on
24    health  issues, and a report on prescription drug advertising
25    that influences health care  costs  is  consistent  with  the
26    Council's duty to promote health care cost containment and to
27    identify   appropriate  utilization  practices  in  order  to
28    contain costs and to ensure access to  quality  care  through
29    the  dissemination  of  data  to  purchasers and consumers of
30    health  care  and   to   public   officials   who   determine
31    health-related programs and policies; and
 
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 1        WHEREAS,   The  Illinois  Health  Care  Cost  Containment
 2    Council is best situated to aid the House of  Representatives
 3    in determining whether this State's citizens benefit from the
 4    additional   prices   and   costs   of   prescription   drugs
 5    attributable to advertising; therefore be it

 6        RESOLVED,   BY   THE  HOUSE  OF  REPRESENTATIVES  OF  THE
 7    NINETY-SECOND GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that
 8    the   Illinois   Health   Care   Cost   Containment   Council
 9    (hereinafter, "the Council")  shall  conduct  a  cost/benefit
10    analysis  of  advertising  associated  with  the provision of
11    prescription drugs to this State's citizens by pharmaceutical
12    companies and distributors; and be it further

13        RESOLVED, That the Council shall utilize a methodology to
14    determine  the  impact  upon  the  necessity  for   inpatient
15    hospital    care,   major   ambulatory   services,   invasive
16    procedures, numbers of visits to health  care  professionals,
17    and  health  insurance  premium  rates  relative to the costs
18    associated with  advertising  directed  toward  this  State's
19    citizens by pharmaceutical companies and distributors; and be
20    it further

21        RESOLVED,  That at reasonable intervals, as determined by
22    the Council, pharmaceutical companies and  distributors  that
23    provide  prescription  drugs  under  programs administered by
24    this State shall cooperate  with  the  Council  in  providing
25    information  necessary  to  carry out the Council's analysis;
26    and be it further

27        RESOLVED, That pharmaceutical companies and  distributors
28    that  advertise  in  media to reach an Illinois audience, and
29    pharmaceutical companies  and  distributors  that  correspond
30    directly with consumers, shall disclose the aggregate cost of
31    the  advertising  of  prescription  drugs in the media and in
32    correspondence  to  the  consumer.  For  purposes   of   this
 
                            -5-               LRB9208865DJgcC
 1    paragraph,  "media"  includes,  but is not limited to, radio,
 2    television, the Internet,  daily  and  weekly  magazines  and
 3    newspapers, billboards, and signs; and "correspondence" means
 4    direct  mail,  telephone  communications, and electronic mail
 5    directed to specific individuals or  households;  and  be  it
 6    further

 7        RESOLVED,  That pharmaceutical companies and distributors
 8    referred to in the preceding paragraphs  shall  disclose  the
 9    aggregate   of   the   portion  of  salaries  of  their  drug
10    representatives and salespersons who  have  all  or  part  of
11    their  employment  in  activities enumerated in the preceding
12    paragraphs; and be it further

13        RESOLVED, That the Council shall collect and compile data
14    from pharmaceutical companies and  distributors  required  to
15    provide  information pursuant to this Resolution. The Council
16    shall use appropriate measures to analyze  and  compare  data
17    with  data  on inpatient hospital stays, ambulatory services,
18    invasive procedures, and visits to health care  professionals
19    to  conduct  the  cost/benefit  analysis required pursuant to
20    this Resolution; and be it further

21        RESOLVED,  That  if   any   pharmaceutical   company   or
22    distributor  fails to cooperate with the Council in providing
23    information pursuant to this Resolution,  the  Council  shall
24    promptly report that failure to the House of Representatives;
25    and be it further

26        RESOLVED,  That  the  Council  shall  disseminate data in
27    accordance with this Resolution and shall, no later than  one
28    year   after   the   adoption   of   this   Resolution,  make
29    recommendations to the House of Representatives on the  costs
30    associated  with  advertising by pharmaceutical companies and
31    distributors. The recommendations shall include, but need not
32    be limited to, the State of Illinois  reforming  its  methods
 
                            -6-               LRB9208865DJgcC
 1    and  procedures to limit payments of advertising costs by the
 2    State under insurance and other  health  plans  and  programs
 3    that  cover prescription drugs for State employees, residents
 4    of  State-operated  facilities  for  the  mentally  ill   and
 5    developmentally   disabled,  inmates  of  State  correctional
 6    facilities, residents of veterans facilities, senior citizens
 7    and the disabled, and Medicaid recipients; and be it further

 8        RESOLVED,  That  the  Department  of  Public   Aid,   the
 9    Department of Children and Family Services, the Department of
10    Human Services, the Department of Revenue, and the Department
11    of  Central  Management  Services  shall  cooperate  with the
12    Council in the acquisition of the required cost  information,
13    in the analysis of the collected data, and in the development
14    of  the recommendations regarding reforms of State purchasing
15    of prescription drugs. The Council, in conjunction  with  the
16    Department  of Public Aid, shall also determine the necessity
17    and procedure for obtaining federal approval for implementing
18    changes in Illinois' Medicaid program to effect cost controls
19    with respect to prescription drug payments, including but not
20    limited  to  the  disallowance  of  unreasonable  advertising
21    costs, and the Department of  Public  Aid  shall  obtain  the
22    approval  necessary  to  implement  such  controls; and be it
23    further

24        RESOLVED, That the Council shall  estimate  cost  savings
25    that  may  be  achieved by limiting the State's liability for
26    costs related to prescription drug  advertising;  and  be  it
27    further

28        RESOLVED,  That  any  savings  achieved  by  cost control
29    measures related to direct-to-consumer advertising  shall  be
30    reinvested  in the State's Medical Assistance program; and be
31    it further

32        RESOLVED, That a copy of this Resolution be delivered  to
 
                            -7-               LRB9208865DJgcC
 1    the  Chairman  of  the  Illinois Health Care Cost Containment
 2    Council.

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