DTC Advertising: Change You’d Better Believe In

Maryann Kuzel

With the election of a Democratic U.S. Congress and the near-collapse of our banking system, there is a rising populist backlash against unregulated big business, and pharmaceutical companies will undoubtedly be swept into the fray. The good news is we’re not in the financial industry. The bad news is some industry experts fear that pharmaceutical marketing could become unrecognizable in as little as three years.

There is little doubt the new Congress will take a more restrictive approach to DTC advertising and step up enforcement compared to the relatively lax Bush years. A new, more powerful Food and Drug Administration commissioner will replace Andrew von Eschenbach, MD. And some longtime formidable opponents to DTC advertising are gaining increased power and influence.

While there is certainly cause for concern and many possible governmental actions with their inevitable unintended consequences, it’s not all doom and gloom. We will also see new opportunities and clarified guidance that, in many cases, will help us develop our marketing communications with greater certainty.

Let’s take a quick survey of the changing terrain and see what it may have in store for us.

Congressional Action
Congress acts based on pressures from constituents and lobbyists, and from their own sense of what is right. There’s a powerful and perennial constituency that believes DTC advertising convinces people to use prescription drugs unnecessarily, which drives up the cost of healthcare and even makes people less healthy due to side effects in some cases. Many lawmakers in the ascendant Democratic Party believe that as well. These two powerful forces are counterbalanced by a pharmaceutical lobby that is comparatively weak.

So this means Congress will continue to lambaste the pharmaceutical industry for marketing practices they believe influence physicians to make prescribing decisions based on marketing rather than efficacy and cost effectiveness. DTC advertising will be painted as a costly evil that raises drug prices and contributes to public health issues as masses of consumers, driven by advertising, take these drugs before their safety is proven.

While prescription drug costs account for only about 10% of total healthcare expenditures, according to a February 24, 2009, report in Health Affairs, these are very visible costs to people who go to a drug store to buy prescriptions. A consumer poll released in a March 2008 article by Consumer Reports showed 74% blaming drug companies for the high cost of healthcare.

Given all of this, what actions are we likely to see and when?

1) Stronger FDA enforcement
The FDA’s Division of Drug Marketing, Advertising, and Communications (DDMAC) recently received a funding boost from Congress, which allowed it to hire seven new reviewers. These people are already increasing DDMAC’s level of enforcement actions. President Barack Obama’s proposed budget has substantial increases for FDA oversight in all areas, so we must expect enforcement actions to continue to increase for the foreseeable future. The best defense, as it’s always been, is to know and carefully abide by all rules and regulations, and to always get pre-clearance of new messages.

2) Reduced drug prices
The law currently prevents the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services from directly negotiating prices with drug makers for the Part D benefit. Mr. Obama’s “Plan for a Healthy America” seeks to repeal this ban and reallocate the savings—as much as $30 billion—to improving overall healthcare coverage and quality. Although universal healthcare coverage, a core element of the plan, can increase pharmaceutical company revenue by expanding the market and lowering the costs of patient assistance programs, these benefits could be more than offset by reduced pricing. That, in turn, means a further decrease in marketing funds available for expensive DTC campaigns.

What is the likelihood this will happen? “It’s inevitable,” says Wayne Pines, president of regulatory services and healthcare at APCO Worldwide and a former associate commissioner of the FDA. “There will be negotiated prices under Medicare Part D as the government becomes more involved in drug selection and reimbursement, which means there will be less money for and less emphasis on promotion.”

3) Moratorium on DTC advertising
Over the past year, U.S. Reps. Henry Waxman (D-CA) and John Dingel (D-MI) led a much publicized but unsuccessful campaign in the House Energy and Commerce Committee to require pharmaceutical companies to delay DTC advertising for the first two years of a new drug’s life. Why two years? These politicians argued that this allows time for physicians to become educated and experienced with the drug and to allow rare side effects that have not shown up in clinical trials to become apparent, before DTC advertising drives masses of people to doctors demanding the new drug.

In response, a few companies voluntarily agreed to a six-month ban on DTC advertising for new drugs. Additionally, The Pharmaceutical Research and Manufacturers of America (PhRMA) issued its new voluntary code in December 2008, which calls for companies to “consider individually setting specific periods of time, with or without exceptions, to educate healthcare professionals before launching a branded DTC television or print advertising campaign.”

The ink was not even dry before Congressman Waxman admonished the industry for not going nearly far enough. While this tirade is likely to continue, he is expected to introduce legislation that would require a lengthy moratorium. Mr. Pines does not expect the law to pass. “Compared to the major problems Congress must deal with right now, a moratorium is a relatively minor issue. I think it’ll be discussed a lot, but not likely to pass.”

4) A new FDA commissioner
The Obama administration is expected to nominate Margaret Hamburg, M.D., a former New York City health commissioner, as the new FDA commissioner, and Joshua Sharfstein, M.D., the health commissioner of Baltimore, as chief deputy. Dr. Hamburg is strongly associated with initiatives to protect public health during natural pandemics or acts of bioterrorism, while Dr. Sharfstein is considered a strong advocate of more tightly regulating drug companies. During the Congressional confirmation hearings, expect to hear questions about DTC advertising—the nominee’s response to those questions will tell us a lot about what to expect from the FDA in our industry. When Dr. David Kessler became commissioner in 1990, he dramatically increased enforcement and created DDMAC. “A lot of the FDA’s new policies will be a reflection of the new commissioner,” explains Mr. Pines. “The commissioner’s statements on DTC advertising in the hearings will be our best map of the future for the time being.”

5) Comparative effectiveness testing
Finally (for this article, at any rate) is the looming subject of comparative effectiveness testing. The recent stimulus package passed by Congress included $1 billion to begin studies with the objective of cutting healthcare costs. The issue here comes down to what happens when these findings are made public? If two drugs are deemed equally effective, but one is less expensive than the other, the pharmaceutical company that developed the more expensive drug will have virtually no hope of recouping its investment. And, of course, there is the perpetual issue of whether the government will employ research methodology that is as rigorous as that used in accepted pharmaceutical science practices.

Regardless of how the details are worked out, if the federal government begins comparative testing and uses that data for making financial decisions for any large-scale public health program, the financial effects on pharmaceutical companies could be enormous.

Beyond Congressional Action
Perhaps the most significant recent development outside of direct Congressional action is Bayer’s settlement with 27 states to spend $20 million on a corrective ad campaign for its YAZ(r) oral contraceptive. This sets the troubling precedent of states’ attorneys general following FDA warning letters to pharmaceutical companies with lawsuits demanding corrective actions. “The bottom line,” says Mr. Pines, “is that we will see more state involvement in actions against DTC advertising.”

There are also strong indications from within the FDA that new and clearer guidelines may be on the horizon for pharmaceutical companies’ involvement with consumer social media. This will reduce the risk of misinterpreting confusing guidelines and may even offer some degree of protection in the use of social media (meaning finally we’ll know what is not allowed).

DTC Marketers “To-Do” List
Knowledge will protect you, so keep up with what is going on at the FDA and in Congress that affects our industry. And don’t despair. There are opportunities hiding in each of these changes. Here are a few:

• While DTC advertising is under assault, customer relationship marketing (CRM) is not. Consumers will always want to know what specific drugs can possibly do for them and their loved ones, and the more we attract and engage them in one-on-one dialog, the less our sales will rely on increasingly regulated advertising. “The trend is toward more unbranded campaigns to consumers who are seeking better health,” says Mr. Pines. As those consumers raise their hands to ask for more information, you have permission to engage them in ways that can improve their health and introduce your drug with directions on how to use it most effectively, which helps build a consumer base loyal to your brand.
• With increasingly clear guidance from regulators on new media, you can include these tactics into your marketing program.
• Concentrate on spending your marketing dollars more wisely. With DTC under increasing attack, and with an ROI that has remained a steady 2:1 on average, there is more reason than ever to conduct marketing-mix optimization analyses to evaluate which activities and combinations of activities bring you the greatest ROI.
• Be smart and continue to pre-clear ads with the FDA. While no guarantee, it provides a strong line of defense and greatly reduces your risk, especially as states become more involved in corrective actions as they did in the Bayer YAZ case.
• Always put the patient first. As long as we always do what is best for the health of our patient- customers, we will have strong arguments that will defend us well.

While these changes may appear to be coming fast and furious and have the potential for disastrous effects, it’s not really quite so dire. These are not new forces for change, and we’re familiar with all the arguments behind them. We also know how to abide by federal regulations, and we’re continuing to learn how to better conduct unbranded campaigns and follow up using CRM best practices.

In short, as long as we remain sharp, responsive and true to our mission to help improve the health of our customers, we’ll continue to do well in this industry.

Maryann Kuzel is President of STAR Healthcare, an Omnicom network of CRM specialist agencies providing deep channel-specific expertise across the entire patient journey. Maryann, an award-winning executive, welcomes feedback at kuzelm@starhealthcare.com.