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More than a quarter of a century ago, the to make it easier for pharmaceutical companies to advertise directly to consumers. Today, it is nearly impossible to get through a family sitcom without hearing an ad listing symptoms and side-effects and encouraging the viewer to "speak with" their physician.

If patients and physicians are tired of the drug company pleas, tighten your seat belts.

Two major have they intend to sell directly to consumers using digital health platforms. Other companies will likely follow suit. It appears major pharmaceutical companies are trying to keep up with successful smaller platforms like Hims & Hers.

Will this trend benefit consumers? I'm skeptical.

The New Frontier: Digital Health and Direct-to-Consumer Medication

If you have watched any PG-13+ streaming service with your teen or significant other, you have probably heard of Hims & Hers. From hair loss to erectile dysfunction, this company advertises directly to consumers and then uses digital platforms to connect patients with healthcare providers who can diagnose symptoms and prescribe medications without ever having met the patient in person. In May, its first quarter revenue increased 46% year over year and was about $10 million higher than Wall Street analysts had predicted.

Why is Hims & Hers so successful? In part, because the company is focusing on challenges like hair loss and erectile dysfunction -- issues that most patients would rather not discuss with anyone in person, even a trusted physician.

Given the skyrocketing demand for GLP-1 weight loss drugs, online direct-to-consumer providers with pharmacy relationships are now trying to get a piece of that market too. Specifically, have been prescribing, and pharmacies with relationships to these providers have been and offering them at a lower price than legacy manufacturers.

Are you starting to get a sense of why pharmaceutical companies are ready to take the leap beyond direct-to-consumer marketing into direct-to-consumer sales? Faced with these new market entrants and competition, pharmaceutical giants are hungry to reclaim their territory.

The Drivers Behind Pharma's Pricing Strategies

To fully understand why pharmaceutical companies are making this move, it is important to consider the drivers behind pharmaceutical pricing strategies.

Pharmaceutical companies often justify high prices by pointing to the substantial investments required to bring a new drug to market. For example, the Pharmaceutical Research and Manufacturers of America (), the drug companies' chief lobbying organization, has argued that over the last decade, its member companies "have more than doubled their annual investment in the search for new treatments and cures."

While there is no doubt these investments are valuable, companies largely set prices without market pressure because of a lack of competition driven by exclusivities and maneuvering around patent law. As a forthcoming paper from the explains, marketing expenses (including direct-to-consumer advertising) add to the high drug prices passed on to consumers, as do complex supply chain dynamics, involvement of pharmacy benefit managers (PBMs), and charity prescription programs.

The paper also illustrates that drug prices are higher in the U.S. than they are in other countries because a large and complex network of players -- from insurers to regulators to drug companies themselves -- all try to influence the process. Direct-to-consumer models eliminate at least some of the players in this ecosystem. They also respond to a social demand: consumers and members of Congress are fed up with high drug prices. Indeed, think the prices of drugs in the U.S. are unreasonable.

Drug giants are responding to that sentiment. But will direct-to-consumer sales actually help patients save money?

The Business Strategy Behind the Direct-to-Consumer Play

Major pharmaceutical companies have argued their new direct-to-consumer offerings will improve price transparency for patients, reduce costs by eliminating the need for much-vilified middlemen like PBMs, and improve access to life-improving medications.

On the surface, this appears to be a major win for patients. But of course, there is more to the story. In fact, this development may come down to just one type of drug: GLP-1s.

A estimated the GLP-1 market would exceed $100 billion by 2030. About 10% of type 2 diabetes patients used a GLP-1 last year, the report noted, but that number could top 35% within the next 6 years. Overall, total U.S. GLP-1 users might top 30 million by 2030, about 9% of the nation's population.

As compounding pharmacies and digital health companies have begun offering to high-priced GLP-1s, the demand for the original, more expensive medications has declined. By going direct-to-consumer, drug companies can bypass traditional distribution channels, maintain tighter control over pricing, and prevent patients from switching to lower-cost alternatives. In essence, they can create a new revenue stream that allows them to retain as much market share as possible, even as competition heats up.

For pharmaceutical manufacturers, it is almost always about protecting their bottom line.

Lower Prices, but Will Patients Become Prey?

Lower drug prices are undeniably good for patients. Most importantly, reducing costs improves adherence to a medication regimen. Anything that reduces the financial burden on patients and increases access to necessary medications should be seen as a positive development. The key word in that sentence, however, is "necessary."

The advent of direct-to-consumer marketing has not been good for patients. released last year by researchers at Johns Hopkins University (JHU), it has increased pressure on clinicians to prescribe drugs that may not actually be the best option for patients. Perhaps the most startling of JHU's findings is this one: drug companies spent nearly 15% more on direct-to-consumer advertising for treatments that demonstrated a lower added benefit to patients. It appears drug companies are most aggressive the closer they get to consumers.

By moving to a direct-to-consumer model, some pharmaceutical companies may be at risk of "pushing" drugs on patients who may not need them, or who would be better off with some other treatment, including one that did not involve pharmaceuticals at all. If not carefully monitored, the digital health platforms that make it easier for patients to obtain medications could lead to overprescribing.

The trend of pharmaceutical companies entering the direct-to-consumer space represents a significant shift. While there could be upsides, including lower drug prices and increased access, it also raises important questions about these companies' motives. As this trend continues to develop, it will be crucial for regulators and healthcare providers to ensure these new models are used responsibly.

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