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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 -4- LRB9208865DJgcC 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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