Healthy Skepticism Library item: 14459

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Wallack T.
Putting sleep ads to bed
The Boston Globe 2008 Oct 6
http://www.boston.com/business/healthcare/articles/2008/10/06/putting_sleep_ads_to_bed/

Abstract:

With slowdown in demand, rise in generics, Sepracor scales back its push for Lunesta

Full text:

The once ubiquitous Lunesta luna moth is becoming harder to spot.

Sepracor Corp., the Marlborough drug company that has flooded the airwaves for years with ads promoting its Lunesta sleep aid, has started to cut back on consumer advertising as the insomnia market slows, rivals cut back on their own marketing, and Sepracor shifts its promotional budget to products that are potentially more profitable.

“I think they are questioning the value of their ad spending” on Lunesta, said Ian Sanderson, a Cowen and Co. analyst. “I think most of the Street felt the ad spending could not be sustained.”

In 2006 and 2007, Lunesta was widely ranked as the most heavily advertised drug in the country, with many of the print and television ads featuring its trademark glowing green moth, gently nudging people to sleep. Last year alone, Sepracor spent nearly $300 million on consumer advertising for the drug, $100 million more than was spent on the number two drug (another sleep aid, Ambien CR), according to Nielsen Media Research.

But Nielsen found Sepracor is on pace to spend significantly less this year. Through the first six months, Lunesta slipped to number five on the list of most advertised drugs, just ahead of Ambien. Plavix, a blood thinner, ranked number one.

The move comes at a time when Lunesta’s growth has slowed because of competition from generics and slower-than-expected demand.

In addition, the federal agency that oversees Medicare trimmed its reimbursement rate for Sepracor’s main asthma drug, Xoponex, further hurting Sepracor’s revenue.

Over the past two years, Sepracor’s shares have fallen by two-thirds. The company has about 2,500 employees, including about 700 in Massachusetts.

Lunesta, though, remains Sepracor’s biggest seller and one of the best-known drugs marketed by a Massachusetts company. Last year, Lunesta accounted for just under half of Sepracor’s $1.2 billion in revenue. The company said it sells the drug to wholesalers for $4.63 per tablet. On the website Drugstore.com, Lunesta is selling for more than $5 per tablet.

But the company is starting to put more muscle behind newer drugs. In April, it launched Omnaris, a nasal spray to relieve allergies. And last month, it launched an asthma drug called Alvesco.

Meanwhile, Sepracor’s shares have slumped on lower-than-expected growth.

Sepracor declined to comment on its advertising strategy. But in a conference call with Wall Street analysts earlier this year, chief executive Adrian Adams indicated the company needs to shift some ad money to newer drugs. Lunesta advertising remains “an important component,” Adams said. “But we recognize that as our portfolio is growing, that we need to manage the spend levels in our portfolio accordingly.”

Sepracor is also trying to fine-tune its Lunesta advertising. In January, it hired a new advertising firm to handle the account, Kaplan Thaler Group Ltd. of New York City, replacing another New York firm, McCann Erickson Worldwide.

Sepracor vice president Mark Iwicki told analysts the firm has new ads that emphasize the idea Lunesta not only helps people fall asleep, but lets them wake up with “refreshed energy.” A Kaplan Thaler spokeswoman said its ads have yet to be released.

Regardless, the market isn’t as lucrative as it once was. Sepracor faces competition from other brand name drugs like Rozerem and Ambien CR, and from generic versions of Ambien. Iwicki has said growth in the insomnia market has slowed and is likely to grow in the single digits this year.

The company said growth has slowed because of the introduction of the generic form of Ambien (driving down the average price consumers are willing to spend on insomnia medications) and because fewer new drugs have been released recently.

Sepracor has also faced litigation over its Lunesta ads. In September 2006, Tharos Laboratories Inc., which made herbal sleep supplements, sued Sepracor, arguing the luna moth infringed on its butterfly trademark. The companies settled for an undisclosed amount.

There’s also debate about the effectiveness of advertising pharmaceuticals to consumers, since they need a prescription before they can buy many drugs, including Lunesta. Drug companies say advertising raises awareness about medical problems and prompts consumers to ask their doctors about possible treatments. Critics say it pushes people to use expensive brand-name drugs they don’t need, driving up the cost of medical care.

Researchers have found mixed results. A study by Harvard University researchers, published last month in the online version of the British Medical Journal, found that advertising seemed to have a significant impact on sales with only one of the three drugs that were examined.