Prescription drug advertising has never had it easy, but lately the $4.3 billion ad sector has come under attack from lawmakers who are trying to get the ads off the airwaves.
Some congressmen are targeting complicated ads that promote a drug to address a malady that you may not know you have. As Washington tries to reach agreement on a sweeping overhaul of health care, direct-to-consumer advertising, or DTC, is being targeted as a contributor to the high cost of health care.
"There are legitimate reasons to criticize DTC, but it doesn't cause problems for pricing, it raises demand," says Bob Ehrlich, CEO of DTC Perspectives, a publishing and consulting company that specializes in DTC marketing. "As a citizen you have to take it for what it's worth. It's advertising. But it's advertising that has to be true."
Nonetheless, lawmakers want to rid the airwaves of them. Rep. James Moran, D-Va., wants them eliminated on the grounds of decency standards. Rep. Henry Waxman, D-Calif., wants drugmakers to refrain from advertising them for a certain period of time after receiving market approval from the Food and Drug Administration. Others, including Rep. Jerrold Nadler, D-N.Y., want to amend the federal tax code to bar pharmaceutical companies from deducting the cost of the ads as a business expense.
Potential legislation comes at a time when the sector has pulled back on spending and faces greater scrutiny from the FDA, which already imposes strong guidelines on what is allowed in the ads. Ad experts say the ads won't disappear because they work, are already regulated and don't add to the cost of health care.
"It's not going to go away but it will continue to change," says Andrew Schirmer, managing director of McCann HumanCare advertising in New York. "And it will continue to be a lightning rod simply because policymakers and their constituents see DTC advertising. It's a misnomer that it is driving the escalation of cost, but it is one that's easy to default to because (the ads are) so visible."
DTC for prescription drugs, down 18% to $4.3 billion in 2008, was still the second-biggest ad spender last year, according to Nielsen. It was second only to autos. The drop was the first since the FDA approved the format in 1997.
Advertising has helped fuel sales. Last year, the top 15 prescription products topped $58 billion in sales, IMS Health says. The industry's biggest seller was Lipitor, with $7.8 billion in sales. Nexium is the second-best at $5.9 billion.
Why DTC ads still stick around:
•They're already regulated. Year to date, the FDA has issued 28% more "warning letters" to drugmakers for false or misleading ads. The number is up because the FDA has more staff reviewing the ads and more drug companies are voluntarily submitting work to make sure the ads meet all the FDA guidelines.
"We are putting more resources into reviewing promotional materials," says Thomas Abrams, director of the FDA's division of drug marketing, advertising and communications. "We try to prevent a misleading message from being disseminated in the first place."
•They work. Advertising adds to the bottom line. Ad analyst John Busbice says a study of the industry's top 25 marketers, which represent about 62% of drug ad spending, shows a majority generating as much as $1.40 in operating income for every ad dollar spent. Busbice, a principal and analyst of DTC commercial effectiveness at IMS Consulting, says a recent study shows brands with sales of more than $750 million could increase ad spending by $100 million or more if they want to optimize profits. "If they could redo 2008 based on our information, the top 25 would want to spend 4% more," Busbice says.
•They are a boon to the ad industry. Networks and publishers will lobby against changes that would pull ad dollars. TV networks and ad trade organizations have already sent letters to the White House and Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee, who is pushing for the tax change. They claim the tax change violates free speech and unfairly singles out one form of advertising. "The ads are firmly rooted in freedom of commercial speech," says John Mack, publisher of online newsletter Pharma Marketing News. "There would be a lot of court battles."
ASK THE AD TEAM
QUESTION: There are ads for Ally Bank that feature children being "tricked." They are priceless, especially the one where a child gets a real pony while the other gets a toy pony. Are these children acting? They seem totally unprepared, and their reactions appear very genuine. I've been wondering about these ads for weeks!
•Myra Weaver, Hollywood, Fla.
A:It's a little bit of both, Myra. The bank, formerly GMAC Bank, did an open casting call for experienced child actors and everyday kids to promote its message of being a fair bank without hidden fees. In the one you mention, an announcer asks a girl if she wants a pony, and she says yes. He hands her a toy pony. He asks a second girl, and she receives an actual pony. The first girl expresses her disappointment by saying, "You didn't say you could get a real pony," but the man says, "You didn't ask."
The reactions were culled from a batch of more than 20 kids, and their reactions were filmed in two different phases. In the first, they are truly tricked, and reactions are genuine. But for a second round of shooting, the kids were briefed on what the trick would be and so were more prepared to react. The final batch of ads combine both reactions.
"We were looking for something pure and true and natural," says Vinoo Vijay, who oversees brand and product marketing. "Traditional banking relies on false images. We wanted to make sure consumers know that we are not like other banks."
Q: What's the name of the great guitar blues music on the Kingsford charcoal ad?
•Germain Houle, Montreal
A: The music is called Grillin & Chillin and its vibe is a "bluesy lazy summer" and was created by a music house in New York, JSM Music. The ad uses the music to set the stage for kicking back — in grand fashion. The ads shows scenes of a barbecue. But as the camera pulls back, the viewer sees that the barbecue is actually taking place on a freeway.
"We tried to capture the vibe of a lazy, summer barbecue in the afternoon," says Joel Simon, JSM president, who says the music is an instrumentation of bass, drums and guitar without any digital music clips. He, the musicians and admakers went into the studio with a bottle of vodka and an idea of the sound they wanted to create. "We came up with a vibe that made the most sense, legitimate to the genre and not too overproduced."