There are many factors that contribute to increased health care expenditures for prescription drugs. Drug costs may rise due to increasing prices at the manufacturer level (raw materials, labor costs), increasing costs of research and development (R&D), or increasing promotional expenditures.

However, Schondelmeyer states that pharmaceutical companies (PCs) spend as little as 10% of sales to make their products, whereas they spend 16% of sales on R&D, and 20% of sales on promotion. Promotional expenditures have skyrocketed in recent years and it accounts for a large percentage of sales.

Inappropriate drug use may also contribute to increased health care expenditures for prescription drugs. Overprescribing or inappropriate prescribing of drug products can result in higher morbidity rates, hospitalization, and higher health care expenditures. As a result, pharmaceutical promotion targeted to physicians has many negative implications.

For example, gift-giving: (1) increases the PC promotional expenses resulting in higher drug costs to consumers, and (2) increases the likelihood for inappropriate drug use.The primary purpose of PC promotion is to further the growth of the company through increasing sales and profit.

The PC promotes product attributes with the goal that the product will be prescribed again, which results in improved sales for the product s Drug Companies do provide valuable information to physicians on new drug therapies. However, a large portion of promotional money is being used to provide gifts to physicians. These gifts are used to persuade physicians into prescribing the gift-giver’s product. Moreover, the offers of expensive and extravagant gifts raises ethical concerns about the practice of physician gift-giving itself.

Accepting a gift can lead to important social relationships with real obligations. Gifts tend to obligate the recipient and thus increase the prescribing of the gift giver’s products. This creates a moral paradox encouraging physicians to satisfy their self-interest without concern for their patients financial welfare. The most common means of drug promotion is through the pharmaceutical company representative (PCR). PCRs frequently bring trinkets such as logo-embossed pens, notepads, and mugs to promote their products. The frequent visitation and giving of gifts by the PCR creates a personal obligatory relationship with the physician. This relationship has been described as a friendship or kinship type relationship.

(1) increases the PC promotional expenses resulting in higher drug costs to consumers, and (2) increases the likelihood of inappropriate drug use.

The primary purpose of PC promotion is to further the growth of the company through increasing sales and profit. The PC promotes product attributes with the goal that the product will be prescribed again, which results in improved sales for the product s Drug Companies do provide valuable information to physicians on new drug therapies. However, a large portion of promotional money is being used to provide gifts to physicians.

These gifts are used to persuade physicians into prescribing the gift-giver’s product. Moreover, the offers of expensive and extravagant gifts raise ethical concerns about the practice of physician gift-giving itself. Accepting a gift can lead to important social relationships with real obligations.

Gifts tend to obligate the recipient and thus increase the prescribing of the gift giver’s products. This creates a moral paradox encouraging physicians to satisfy their self-interest without concern for their patient’s financial welfare.

The most common means of drug promotion is through the pharmaceutical company representative (PCR). PCRs frequently bring trinkets such as logo-embossed pens, notepads, and mugs to promote their products. The frequent visitation and giving of gifts by the PCR create a personal obligatory relationship with the physician. This relationship has been described as a friendship or kinship type relationship.