The European Union has implemented a ban on the direct to consumer advertising for medicines that are only available by prescription. The ban does not include the over the counter drugs as they are allowed to use direct to consumer advertising for promotion. The ban was known as the EU Pharmaceutical Legislation (Narayanan et. al., 2004). Large pharmaceutical companies such as those of the United States will have to first provide information in meeting the demands of patients and heathcare organizations. Many pharmaceutical companies have already attempted to lobby the legislation, however, they did not succeed. The legislation does allow pharmaceutical companies to inform the citizens but they are not allowed to promote their products indirectly or directly. In Europe, direct to consumer advertising has been assigned for the benefit of the public like disease awareness campaigns that do not contain promotional messages but only educational information. The European Union has banned branded drugs from using direct to consumer advertising because the body wanted to encourage consumers to seek diagnosis by increasing their level of awareness on diseases.
This ban on direct-to-consumer advertising is considered to be an obstacle for US pharmaceutical companies because they can no longer market their products the way they wanted to.
In the United States, branded drugs are allowed to use direct to consumer advertising to promote their products. The advertising ban in Europe can affect the sales of American pharmaceutical companies because of the weak advertising methods that are made available to them in Europe. Pharmaceutical companies are known to gain profit from marketing and advertising. Prescription sales have increased in the United States as prices of pharmaceutical drugs increase every year. Drug companies spend a great deal of their investment in the promotion and marketing of products. The rising costs of healthcare services is affected by the prices of pharmaceutical drugs.Want an expert to write a paper for you Talk to an operator now
The current economic crisis in the United States plays a role in health care economics. Pharmaceutical companies are affected by the economic crisis. The cost to produce the medical drugs is also rising. For many years now, health care systems in the country have provided thousands of jobs to the labor market.
Without it, the labor market of the United States will have nowhere else to go. The economy will sink to a deeper level. Jobs in health care and other related sectors have enjoyed have increased over the past years. Health care has become a major driver of the economy. Without the massive hiring of the health care organizations, the unemployment rate in the United States will greatly increase. The costs of medical supplies and equipment have also increased because of the global financial crisis. When hospitals purchase their supplies at a higher price than before, they will have to charge hospital fees at a higher price too so that their revenues will not suffer (Ginsberg, 2008).
The changes in technology have also impacted health economics because the developments will help bring down the cost of healthcare. New equipment and technology will mean improved efficiency in delivering hospital services. The nurses and doctors will be able to do their jobs quickly. The machines will help generate records for billing and collection. The patient will no longer have to wait for many hours to be checked out of the hospital. Information technology makes work easier. The costs of maintaining quality care in hospitals is also increasing of wages and salaries. Hospitals who want to retain their best nurses and doctors will have to offer them competitive salaries and benefits. Competition is high in the labor market. Hospitals who already have the best staff will not allow shortage of staff to happen. All these high costs make quality healthcare expensive.
In order to look for more profits to sustain the operations of the pharmaceutical companies, they have decided to take their products to foreign markets like Europe. The marketing tactics of pharmeceutical companies are usually directed to the consumers, physicians and the government. In the United States, drug companies freely promote their products directly to the consumers using push strategies such as the direct-to-consumer advertising. Indirect marketing strategies are used when the drugs are directly marketed to the physicians who prescribe the drugs (Wymer, 2008).
Pharmaceutical companies of the US have no choice but to follow the rules when they want to market their products in Europe.
The European Union is not open to negotiating the restriction on the use of DCTA. Companies will have to adjust to maintain their presence in the European markets. Consumers are encouraged to seek diagnosis first before buying branded drugs. The use of direct-to-consumer advertising methods can only tempt consumers to buy more of branded drugs without physician consultation. Despite the rising costs of healthcare in the United States, pharmaceutical companies have expanded their operations in international markets in the hopes of increasing their revenues. With the EU's ban on the use of DCTA on branded drugs, US companies should not expect big profits in the end. If they were to advertise their branded drugs in Asia, DCTA would have been allowed because of the promotion of consumer choice when it comes to choosing pharmaceutical drugs. With the limited advertising and marketing efforts to be implemented in Europe, US companies cannot maximize their marketing and advertising strategies to work to their advantage. It is too costly to leave the European market because of the stiff competition and opportunity loss. US pharmaceutical companies should bear it out and continue to lobby for a lift on the DCTA ban.