Healthy Skepticism Library item: 14765

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

Loftus P.
Drug Companies Trim Advertising Spending, Tweak Approach
CNN Money.com 2008 Dec 9
http://www.cafepharma.com/boards/showthread.php?t=344138

Full text:

Those ubiquitous television commercials for prescription drugs probably won’t disappear anytime soon, but the pharmaceutical industry has reigned in advertising spending and is expected to announce this week voluntary restrictions on its ads.

Several trends account for changes to the industry’s advertising strategy: Congress has increased its scrutiny of drug ads, with some members arguing they mislead consumers about drug safety and effectiveness. Fewer new drugs have been approved in recent years, and previous blockbusters have lost patent protection. Also, the industry’s historically hefty profitability is under pressure, causing some companies to seek a more-targeted advertising approach in order to save costs.

One of the industry’s responses is that its major U.S. trade group, PhRMA, is expected to unveil restrictions that include a specified minimum period of time before advertising can start for a newly approved drug, among other guidelines. The new measures will update guidelines PhRMA adopted in 2005 that were designed to ensure ads provided accurate and balanced information about safety and effectiveness.

Meanwhile, some companies are trimming ad spending. “There’s a general tendency to be more careful with how we spend the money,” Schering-Plough Corp. (SGP) Chief Executive Fred Hassan said in a recent interview, noting that the company has scaled back ad spending this year.

U.S. pharmaceutical ad spending dropped 6% in the first eight months of 2008, to $3.2 billion, according to TNS Media Intelligence, a New York provider of ad data. That dip followed a 3% decline for all of 2007, to $5.3 billion.

Much of the decline came from a downturn in so-called non-branded advertising, including corporate promotion messages and disease-awareness spots, TNS said. The decline in Food and Drug Administration approval of new drugs is another factor; Spending on new brands fell 7% last year while spending on established brands rose 5%, TNS said.

Also, some new drugs have narrower indications than older blockbusters, and some companies already appear to be waiting longer after new drug approvals to begin ad campaigns.

Before last year, consumer-targeted drug advertising had generally been on the rise since the FDA loosened restrictions on television ads in the late 1990s, peaking at $5.4 billion in 2006, according to TNS. Most countries outside the U.S. continue to prohibit consumer-targeted prescription drug ads.

The ads have brought to TV viewers such images as the glowing moth promoting Sepracor Inc.‘s (SEPR) insomnia drug Lunesta and the couples in side-by-side bathtubs whose lives were presumably brightened by Eli Lilly & Co.‘s (LLY) impotence drug Cialis. They also provided fodder for satire as a narrator read the drug’s potential side effects.

More Diagnoses

Drug makers have counted on consumer ads increasing the number of diagnoses of the diseases targeted by their drugs. Some studies have shown that people who see drug ads are more likely to ask their doctors for prescriptions, and doctors often go along even if they’re uncertain about the medical necessity. Defenders say the ads increase people’s awareness about diseases and potential treatment options, and can help avert underuse of drugs.

Wyeth (WYE) has policies to ensure its consumer-targeted advertising “benefits the public health by increasing disease awareness, while educating and motivating patients to be more involved in their health care,” said Geno Germano, head of the company’s U.S. pharmaceuticals division.

But the industry’s ads also have been criticized for leading to drug overuse and for misleading patients about drugs’ risks and benefits. Some heavily advertised drugs have been caught up in controversies about their safety and effectiveness this year. Merck & Co. (MRK) and Schering-Plough halted TV ads for their jointly marketed cholesterol drug Vytorin after a study raised questions about its effectiveness.

Also, Pfizer Inc. (PFE) withdrew ads for its cholesterol drug Lipitor after it was revealed that a doctor featured in the ads wasn’t actually licensed to practice. Pfizer subsequently launched new ads for Lipitor.

The termination of the Vytorin and Lipitor campaigns came in the wake of scrutiny by the House Committee on Energy & Commerce. Committee leaders suggested the ads – together with those for a Johnson & Johnson (JNJ) anemia drug – were potentially misleading and deceptive. The committee asked the companies to consider certain restrictions on ads, including a two-year moratorium on ads after a new drug is launched.

Some of the companies responded to the congressional pressure by agreeing to certain restrictions, including a moratorium on ads within the first six months of a drug’s launch. Such concessions are viewed partly as a move to stave off potential new regulations on drug ads.

“There aren’t many industries out there that want government involved in their business in a restrictive manner, not when it comes to the advertising and marketing part of the business,” said Jon Swallen, senior vice president of research at TNS Media Intelligence.

Public Backlash?

Some industry insiders have recently questioned the wisdom of consumer advertising. They suggested that hefty marketing budgets have contributed to a public backlash against the industry by undermining the argument that high prices for some drugs help fund continued research on new drugs. Some of the criticism has come from executives at specialty-drug companies that don’t rely on advertising as heavily as promoters of primary-care drugs do.

Last week, William Burns, head of Roche Holding AG’s (RHHBY) pharmaceutical unit, said at an industry conference that consumer-directed drug advertising “ has been the worst decision for the drug industry.”

Issues of reputation aside, drug makers are adjusting their strategies as they grow more conscious of the bottom line. “I think the industry is looking more critically at return-on-investment in part because of the large amount of money that’s on the table and the risk,” said Swallen of TNS.

Schering-Plough’s Hassan said the company has scaled back direct-to-consumer advertising in an effort to conserve resources and take a more targeted approach. The company also is exploring nontraditional media such as online advertising.

AstraZeneca PLC (AZN) has put more emphasis on digital advertising of its drugs and less on print advertising. This year, AstraZeneca’s print advertising spending declined from 2007, a spokeswoman said. Some 20% of the consumer marketing budget was allocated to digital advertising, up from 15% to 16% in 2007.

Few people expect drug makers to take any drastic steps away from big-budget direct-to-consumer advertising, however.

“I don’t think they’re going away anytime soon,” said Julie Donohue, professor of health policy and management at the University of Pittsburgh. “I think they’re useful in terms of promoting a small subset of drugs. Obviously the industry is seeing enough of a return on investment to continue these campaigns.”