About AEF | Newsletter | Site Map | Legal | Advanced Search
Print Version

Are Direct-to-Consumer Drug Ads Doomed?

How much longer will you be able to see advertisements in which a person blissfully runs through a field after taking some kind of antiallergy medication? Or those in which a down-and-out man is suddenly sunny after being prescribed an antidepressant? How much longer will you giggle at that commercial with the warning that you should call a doctor if a certain condition lasts more than four hours?

These are questions that keep drug companies, as well as the television stations and magazines that subsist on their ad dollars, up at night (Ambien, anyone?). Direct-to-consumer (DTC) advertising by pharmaceutical companies has always been somewhat controversial. The U.S. is one of only two countries that permit it (New Zealand is the other). Critics claim that these advertisements encourage consumers to seek out overly expensive brand-name drugs from doctors. Their symptoms might not require such medications, and when they do, cheaper generic drugs may be available. Such marketing probably drives up overall health-care costs. More important, new drugs that are aggressively marketed can pose a safety risk. Merck's heavy promotion of pain reliever Vioxx — look at Dorothy Hamill skating without any strain! — is a prime example of advertising gone awry. The drug was later taken off the market after it was found to increase risk for heart attacks.

So with a new President who has vowed to fight Big Pharma to lower drug costs and a Democratic Congress with several anti-DTC advocates, drug and media companies are justifiably jittery. "We are entering an environment that is going to be more open to those who are adamantly opposed to direct-to-consumer advertising," says Jay Bolling, president of Roska Healthcare Advertising in Montgomery, Pa.

However, perhaps the companies shouldn't freak out — yet. The DTC issue has not been floated as an early White House priority; it is unlikely to be dealt with until weeks or months after Obama names a nominee for FDA commissioner, an announcement that could come within days. Plus, some of DTC's most vocal critics in Congress aren't calling for an all-out advertising ban. For example, Democratic Representative Bart Stupak of Michigan, chairman of the House Energy and Commerce Subcommittee on Oversight and Investigations, wants a moratorium on DTC ads during a drug's first two years on the market. "Two years will give the FDA and doctors time to see what safety issues arise once a drug is approved," Stupak says. "It will also allow adequate time to educate doctors on how to use the new drug."

The true power player in the full House Energy and Commerce Committee, chairman Henry Waxman of California, differs from Stupak one key point. Yes, he also supports a two-year DTC moratorium for new drugs. "Americans must face an inconvenient truth about drug safety," he says. "The truth is that we inevitably allow drugs on the market whose risks are not fully known." Waxman, however, insists that the FDA should have the discretion to make exceptions to the moratorium. This policy follows a recommendation that the Institute of Medicine offered in a 2006 report, "The Future of Drug Safety." "It doesn't have to be a full two years," Waxman says. "It's allowed to be limited to drugs that the FDA thinks might be a safety problem." Big Pharma certainly appreciates this less aggressive approach. (See the top 10 campaign ads of all time.)

A two-year ban on new-drug marketing could hurt the bottom line of drug companies. But it wouldn't be devastating. "I don't think it will have a particularly big impact," says Eric Schmidt, equity analyst at Cowen and Co., an investment bank. "The companies have already started scaling back their marketing budgets, and they've tended to direct advertising into more established brands." According to Jon Swallen, a research analyst at TNS Media Intelligence, pharmaceutical companies spent about $4.7 billion in magazine and television advertising in 2008, a 10.7% drop from 2007. And only about 15% of DTC ads are for drugs that are less than a year old.

Further, while a two-year delay wouldn't exactly help struggling media outlets desperate for ad revenue, it shouldn't put them out of business. Swallen figures that if the pharmaceutical moratorium were in place last year, magazines as a group would have lost roughly $210 million, or 0.8% of the approximately $25 billion in total ad revenue it took in for the year. And that's using a worst-case scenario in which the FDA kept all new drugs off the ad market for two years. Similarly, television outlets would have lost some $423 million, or 0.7% of its $60 billion in total ad revenue for the year.

Swallen notes that such losses would only last during the first two years of the ban. During that time, new drugs would still receive FDA approval, and consumer advertising could begin once the moratorium is over. "The line would be frozen behind the gate for two years," Swallen says. "But the number of brands waiting in line will grow, and there will be the same flow into the market once the gate reopens. It's a onetime deferral."

Any forced delay would certainly endure a First Amendment challenge. "In free-speech areas, government management of speech, even if it's commercial speech, should always be the last resort," says Billy Tauzin, a former Republican Congressman from Louisiana who now runs Pharmaceutical Research and Manufacturers of America, the industry's trade association. Banning tobacco ads is one thing — cigarettes can kill you. But these are prescription drugs we're talking about. They at least have the potential to save you, right?

Waxman takes a harder stance. "I think the First Amendment is not an absolute guarantee to say whatever [we want] under any circumstances," he says. "We often prevent free speech when it can do harm — such as yelling 'fire' in a crowded theater ... I think there's a balancing. A very limited restriction on the First Amendment right to advertise drugs, if there is such a right, is reasonable for the public safety."

While those tied to the drug industry may disagree, they can take solace in more positive news: Waxman won't police DTC anytime soon. "We've got the stimulus bill with a number of important provisions, and I'd like to get onto the big issue, which is universal health care in this country," says Waxman. "And while we've got to be paying a lot of attention to the FDA in a number of respects, I think the food-safety issue is a lot more important than this one at the moment. So it's just not the highest item on my agenda."

The companies should enjoy this calm, because it likely won't last. The Democrats will get around to the drug companies at some point. And if Congress pushes through a two-year ban, could that set a precedent for further DTC restrictions down the road? Are drug and media companies headed down a slippery slope with Congress? "Give them an inch, they'll take a mile — there's concern about that," Bolling says. "There's no question the Congressmen will take it as far as they can. This is a platform for them. This is, 'I am here to save the American public from these big, bad pharmaceutical companies.' " (Waxman says he does not support a full DTC ban.)

On top of this pressure lies the Obama wild card. The President has said that he wants Medicare to negotiate drug prices directly with drug companies, instead of through managed-care providers. What if the Federal Government reduced its Medicare reimbursements to drug companies who advertise to consumers? Or required them to help fund some kind of public health or education initiative? "The pharmaceutical companies are most nervous about a financial requirement for those who are doing DTC advertising," Bolling says. "It would have companies over a barrel. That's where it's really going to hurt." Things may be quiet on the drug front right now, but with a new Democratic President and Congress in place, Big Pharma should stock up on the painkillers.


Sean Gregory, TIME. February 4, 2009

Copyright © 2009 Time Inc.. All rights reserved.