So Maybe DTC Ads Aren’t Worth It, After All
30 CommentsBy Ed Silverman // November 10th, 2009 // 8:20 am
Judging by a recent survey, that may seem to be the case. Direct-to-consumer ads are mentioned mostly by docs to increase patient acceptance for a medicine that’s already been chosen. But unaided - or spontaneous - mention by patients or actual patient requests for a specific med is a rare phenomenon, according to the survey by Verilogue.
The firm tracked brand requests coupled with a reference to specific ad campaigns across 12,500 doctor-patient conversations from 2008 and covered 20 disease states and 46 different branded prescription drugs. Overall, DTC ‘pull-through’ in conversations in a doc’s office is low - just 3 percent - and specific patient requests for advertised med are even lower - .002 percent.
Significantly, the most frequently pulled-through brands from the firm’s database failed to align with brands where DTC spending is the largest. Not including Internet ads, these were - $186 million on Advair; $180.6 million on Plavix; $171.6 million on Cymbalta; $151 million on Lyrica; and $146.9 million on Ambien. The ‘most referenced’ DTC brands were Boniva, Enbrel, Humira and Reclast, with Detrol LA and Gardasil tied for fifth place.
Patients, meanwhile, most often brought up side effect concerns arising from fair balance statements in Advair TV spots. Such as? “I saw on TV that Advair can cause pneumonia in some patients.” And Ambien, another of the most heavily promoted drugs, prompted this reply: “Yeah, I saw the commercial. I think it’s, uh, Ambien that says you might go out and eat and not remember. I thought, ‘Great all I need.’ ” All that money and for what?
Condor
Huh.
This seems to more widely confirm the Advertising Age data (on percentage of positive v. negative social media mentions — of branded drugs), I wrote about in early October.
This is clearly a more rigorous test of the notion though. Good stuff, Ed!
[Remember also that this same trend was seen in data out of Canada, regarding Schering-Plough's (now Merck's) Nasonex, last year.]
So — to the extent that insurers and Meicare adn Medicaid have helped fund DTC (as we know it is “baked into” the overall prices of the drugs). . .
Should we seek a refund?
Namaste
Atlex
Condor et al,
Since you seem confident that DTC doesn’t work and the total cost of DTC is ~1%-2% of total drug spend, this should make the issue unimportant to you. So stop complaining!!!!
As for me, I see enough data to suggest that DTC still has great value as an educator of consumers, a catalyst for patient-physician interaction, and, yes, a valuable part of the marketing mix when used in the right way.
Atlex
Industry Guy
Atlex-
You must be in marketing. Being in research I see DTC as only a means to give you bozos jobs and waste useful money that should be spent elsewhere. Luckily for you, all the upper management MBA types all came up through Marketing. DTC should be banned so that the pharma industry can try to regain its image in the public eye (remember helping patients and all that…)that you and your cronies have ruined for your shortsighted profit taking and then abandoning ship to do it all again somewhere else.
Condor
Hello Atlex –
I am certain you do not mean to tell me to “quit complaining” about how the drug companies are spending MY own money. For that is what we are talking about — in insurance premiums and tax dollars.
It would be silly, to say that — silly, in a childishly arrogant way.
I would love to see the data that places the DTC spend on any given ADVERTISED drug (not spread over all drugs!) at 1% of total drug price.
Citation, please?
Namaste
Justice in Michigan
Whether DTC works or not, it is pretty clear that the decline of the industry’s reputation as a whole is tied to the surge in televised DTC in ‘97.
Perhaps there is a way of doing it differently that would have a different impact. To this point, it appears that this way of selling drugs has had the unwanted consequence of unselling the industry as a whole.
Chris
Not sure that the ‘decline of the industry’s reputation … is tied to the surge in televised DTC in ‘97.’
The decline of the industry’s reputation is tied to the numerous cases of unethical marketing practices and pushing the envelope regarding drug safety.
And Condor, are you aware that drug prices are based on what the market will bear? A reduction in DTC would not lower drug prices.
Condor
Hello Chris –
I can see this dialogue will be entertaining, if not enlightening.
If eliminating DTC, entirely — by statute, or rule — as was the case, from the 1930s to the late 1970s — did not reduce the price of drugs, another answer would be to simply re-regulate the industry. You should be careful what you wish for.
You are aware, of course (in counterpoint to your “what the market will bear” talking point), that your indusrty (and mine) sells an “inherently dangerous“, and largely opaque product. A product that cannot be understood without the intercession of truly-independent experts. As such, the federal government possesses the right to essentially regulate it in any way it sees fit (including out of existence).
SO, there is little logical justification for a “what the market will bear” approach any longer here, unless you mean to bring ADDITIONAL legislation down upon our industry.
Replies?
Namaste
Condor
To be clear — these medicines can save lives.
That should be what this is all about — not how much blood may be squeezed from Chris’s allegorical turnip.
Namaste
Chris
Whether or not pricing is logical is not the issue, it is the way it is done. And reducing DTC will simply allow for reallocation of marketing dollars or increased profits — it will not end up reducing the costs of drugs.
Can you even imagine a pharma company saying that we decided to not do DTC marketing and thus we are going to pass the savings on to payors?
Condor
Chris — as I said, this dialogue is likely to generate more entertainment value, than enlightenment.
We are just too. far. apart, you and I.
I CAN imagine FDA, or COngress itself returning to the original default position:
“No DTC adverts — at all.”
I can ALSO imagine Congress deciding to make pharma negotiate directly with the federal government for pricing.
Why do you think Billy Tauzin, and PhRMA tossed $80 billion into the pot — just as fast as they could?
Because that is cheaper than having Congress legislate direct pricing negotiations. The high-handed attitude was once mine, as well — I would encourage you to take a good look around.
There’s a new sheriff in town.
Namaste
Condor
BTW, my argument is NOT that pricing is “illogical” — it is that you’ve misperceived the breath-taking pace of change, in your own US pricing market-model.
Just to be clear.
Namaste
pharma pr hack
DTC advertising only occurs by a change in the FDA regulation during the Clinton administration allowing for the abbreviated label for an advertisement in that medium. Requiring the full label always made TV not an appropriate medium for advertising and that is just a simple rule change to put the genie back in the bottle. The full page of white 8 point Times New Roman on the back of magazine ads won’t work on TV except for the longer infomercial format. But then all the drug ads would be late at night!
Chris
I think our opinions are probably much closer than you think, at least given your other posts and website.
I see both of your latest scenarios as possible, and I have not made any comment with regards to whether or not DTC advertising is good or bad - only that it is not the root cause of a decline in perceptions of the pharma industry and that a reduction in DTC spend would not translate into reduced price of pharmaceuticals.
I am also not saying that I support ‘what the market will bear’ pricing. I am simply stating that is how a significant amount of pharmaceutical pricing is done.
Atlex
Industry Guy,
Sorry to blow your theory, but I’m not in marketing. I’ll not try to match your personal insult by questioning the effectiveness (or lack thereof) of recent drug industry (public and private) R&D. I should also remain you (in defense of marketers, as opposed to sales representatives), they are only doing the job they are being asked to do. They have four basic levers to pull (in my text book they were termed the 4 Ps) and within the realm of law and ethics, they should seek to do the best job they can.
Condor,
my calculation is relatively straightforward. DTC spending last year was $4.4B (see http://www.fiercepharma.com/story/pharma-crops-dtc-spending-8/2009-04-16) while industry revenue was roughly $300B. By my calculation that’s between 1% and 2%.
Second, if you really think that eliminating DTC lowers prices, I suggest that you go back and read your economics text from college. Based on generally accepted economic theory, promotion lowers costs rather than raises them.
By the way, I’ve not said whether DTC should or shouldn’t be legal. But, based on ROI, pharma companies are clearly motivated to use it as part of the marketing mix.
One final point…the industry is in no way spending “your money”. It ceases to become your money when you make the choice to purchase a medication.
Atlex
Condor
Ah, so Atlex admits his is an apples to elephants comparison. Next — ask an Econ. prof. whether drugs are fungible goods; the theory you cite, by its terms, applies only to fungible goods.
Finally, Atlex, please address yourself to the fact that tax dollars pay for Medicare drugs.
Namaste
pharma pr hack
The industry spends everyone’s money - just the same as Boering and Lockheed Martin and now GM does.. tax dollars fund a great deal of R&D from basic science to actual molecular research. Case in point, the drug that gave Lance Armstrong his Tour De France win was merely licensed to Bristol Myers Squibb for sales and marketing but discovered by taxpayer dollars. An oldie but goodie on how the prescription drug industry became pill pushers again is “Our Daily Meds” by Melody Peterson. Nothing wrong with government providing research for an industry but that does throw what the market can bear pricing on its ear and should lead to more transparency.
ex-FDA Reviewer
The motivation for government funding of research that will be developed into products is in part due to the economic good it provides to society.
Unfortunately this has been lost. FDA and NIH train an excess of scientists for the pharmaceutical industry many of whom are foreign nationals and who will return to their home countries where pharma is sending those jobs that were previously done in the US.
This is not lost on these foreign nationals. Some have even told me that they are happy to be trained on the US tax dollar knowing that they will eventually return to their home countries where the jobs will be transferred as this will a form of just retribution for past economic abuses that western countries have committed agains their own homelands.
Former Pharma Marketing Director
More to the point, people put money in the insurance plans to cover cost of treatment for illnesses. We need to be assured that we are maximizing dollar revenues. Should we really be putting money into a fund that will inevitably be used to market drugs to us that we possibly do not need?
This is quite a conundrum. After being in marketing for a very long time, I began to find it disturbing. If these drugs really are necessary and most can only be prescribed for by a doctor and need to be claimed as part of my health care plan, then why do we have to market these things to consumers? If the drug does what it says, and my doctor is good at what he does, which includes keeping him/herself educated on the variety of treatments for any one specific ailment, why do I have to put money into DTC? I preferred to funnel it directly to CME’s and the like. It dawned on me that I might be fostering a rush of patients going into their doctors saying “I self diagnosed I need the purple pill”. It was something I didn’t want to be part of. it also dawned on me that some doctors were going to get tired of hearing it, in fact I heard from a few of them…
Are we really trying to get people to go “shopping” for a sickness? Why do we want to get people to buy a disease and the treatment, while trying to watch the nightly news?
Finally, DTC’s to me has always fostered a “commodity” mind set. Is health care and illness a commodity to be traded? If so, then it is a fungible good. However, it can’t be a commodity, because we need the intervention of a professional to appropriately diagnose and monitor and help us access the treatment. The drugs themselves are highly regulated.
Hmm, How many research jobs could be saved if you pull the $186 million away from the DTC spent on Advair????
We do not need highly paid for spokesmen nor DTC’s. We need people to be accountable and re-align the funds before screaming bloody murder about the jobs that will definitely be lost because of health care reform…
Maybe if only those patients who need certain drugs take them, then we can all afford to help the patients who really need certain drugs access them.
DTC’s do not belong in the pharmaceutical drug marketing mix…Just because it was this way for some time, doesn’t mean it was right…
cliffintokyo
FPMD
Your last post is great, and right on the money! (No pun intended).
I certainly do not want a system where my health insurance premiums are part-funding DTC advertising for drugs which I expect my doctor to determine whether or not are right for me.
Meanwhile the European pharma industry prospers without DTC, and doctors there seem to be more respected….
On the down side in Europe, (UK specifically), pharma has to contend with the emergence of government second hurdle *tools* such as N.I.C.E. which limit physicians’ choices of the most suitable meds for their patients. Japan also has an interventionist policy.
Can’t wait for the US to smell the coffee and return to the essential priority of the doctor-patient relationship instead of the usurping and unwelcome doctor-pharma MR relationship, which makes many people distrustful of their physicians. Perhaps this is the real reason for big pharma marketing wonks using DTC?
For your own good (and health), better get rid of DTC, because it appears to be at least indirectly fuelling consumer suspicions, which pharma certainly does not need (at anytime, and especially at present), and apparently it is not really effective anyway, judging from the contents of this blog.
atlex
Condor,
Big deal…tax dollars pay for drugs through Medicare (and Medicaid, VA, DoD, FEHBP, etc.). These same tax dollars probably help fund your health plan (assuming that you are in an employer plan like most working adults), since employers are able to account for these as expenses and you are able to get these benefits without paying taxes on them. Tax dollars also fund your roads and bridges and many other things. So your point is…what? Insurers can advertise; defense contractors advertise, hospitals advertise, physicians advertise, DME companies advertise. Why all of this focus on pharma?
If you don’t like DTC, fine. You’re free to work for laws to banish them. But, be consistent. If your beef is with the use of tax payer dollars, then yell and scream about all of these other player, both in healthcare and not, who also “use” taxpayer dollars to fund their advertising and promotion.
Atlex
Atlex
Condor
Hello Atlex –
I fear we’re about to reach a point where I’ll simply “agree to disagree” with you, and stop typing. We are just too far apart.
See, I think buyers of pencils, bridges, roads and even F-16 fighter jets are more readily able to discern the value of those things — than the CONSUMER-buyers — of prescription pharmaceuticals.
At the risk of beating this already long-dead horse, drugs are almost entirely “opaque” goods. So, your analogy to these other largely “transparent” goods is fatally flawed.
Caveat emptor only works when one can “kick the tires“. How can I do that, re Vioxx, for example? [Without increasing my risk of heart-attack, that is!]
This is why we, as a nation, have interposed FDA between the pharma-sellers, and these buyers — to improve the likelihood that what is purchased is of some actual health outcomes benefit. If it is of benefit, advertising to doctors may be appropriate — but advertising to consumers may not be. All DTC does is add to the cost-burden for private pay individuals, insurers and taxpayers. As you yourself pointed out above, $3.3 billion of annual incremental costs.
Do you really believe a doctor wouldn’t prescribe a truly-helpful drug, if s/he weren’t “badgered” about it, by his/her patient — that saw a Super Bowl TV commercial for say, Cialis?
C’mon — we’re all more sophisticated than that. To suggest otherwise is to insult US doctors — your ultimate customer base.
The truth is, all DTC is simply aimed at maximizing profit, often at the expense of good medicine. Vytorin is Exhibit A for this proposition.
In any event, I wish you well.
Namaste
atlex
Condor,
How convenient that you didn’t address advertising by doctors and hospitals (or lawyers, etc.). It’s pretty hard to “kick the tires” around any of those areas. All I ask for is consistency…come out as hard against those as against DTC and I’ll congratulate you on your principled stand. Until then, I view it as simply a screed against pharma.
Atlex
Condor
Actually, I do think advertising by lawyers is unseemly — and almost singularly uninformative, given the regulatory overlay on it. So — I’d say — why bother doing it?
As to doctors’ “DTC”, I similarly think that there ought to be less of it — as it is, there are several important restrictions in most states on “DTC” by doctors and lawyers — and yes, Atlex — hospitals.
I think all of these are appropriate areas for significant, and perhaps increased, regulation.
Last time I looked though, none of the lawyers spending on advertising were being paid by the federal government to any significant degree.
The opposite seems true of hospitals and pharma and yes doctors.
But this discussion was all about pharma DTC, wasn’t it?
Namaste
Jaynesday
Good point Condor - The part about interposing the FDA and the medical profession btw the producer and the consumer as a means of protection for a product that is “opaque” and potentially lethal.
The only problem is that the FDA is failing through being either overwhelmed, circumvented, tricked, or overtaken by the industry. So we have put ourselves in a very dangerous position as yearly the industry strikes out to free itself from the limits of their interposers. DTC is one such undertaking.
The pharmaceutical industry has no business doing anything directly to the consumer.
atlex
Condor,
Pharma operates under several important restrictions as well and has both government-imposed and self-imposed limits on what can or cannot be done with DTC.
As for lawyers, last I checked, promotion expenses are an offset to income and thus lowers taxes paid to government. So advertising by lawyers is essentially subsidized in a similar fashion to promotion by pharma, hospitals, insurers and physicians.
Atlex
harpy
A few more studies like this and we won’t need laws to banish them. Besides, it’s all about teh Interwebs and 2.0 now. FDA hearings start tomorrow…
Condor
Atlex — I will likely leave our discussion at this:
If you think an “expense” deduction (re lawyer advertising) is equivalent to the DIRECT purchase, by agencies of the federal government (of some $100 billion of drug-product, annually). . .
We really are out of any meaningful space for reasoned discourse.
Namaste
James
Jaynesday, Condor et al…
do you recognize that DTC ads provide education to consumers? While it may be that some of this information is biased, and may cause some consumers to believe they need remedies for conditions they don’t actually have, it can at least provides a starting point for them to learn more, can it not?
And to say that “The pharmaceutical industry has no business doing anything directly to the consumer” is just absurd. What about patient inserts?
Not all patients have a great relationship, or any relationship, for that matter, with a physician. Not all doctors take the time to understand their patients’ conditions, much less teach those patients about treatment options. Shouldn’t those patients have access to information remedies that may be beneficial?
Jaynesday
James,
DTC ads - you could call it education if you like but its intention is to maximize sales/profit. Apparently it doesn’t work well.
I’d prefer that they spend their money educating my doctor and quit pretending to look after my wellbeing while grabbing for my billfold.
Condor
Jaynesday — Ding!
Spot-on!
Namaste