Technology

More Frequent Dose of Dollars for Drug Ads


Drugmakers' spending on consumer advertising is growing faster than their total spending on marketing, a new study finds. Can efforts to curb such ads keep up?

It has been a decade since new federal regulations allowed drug companies to start pitching prescription medications on TV. Yet despite the controversy that has arisen from this direct-to-consumer (DTC) promotion, spending on such ads continues to grow faster than spending on drug-industry marketing as a whole. So say the authors of a study set to be published in the Aug. 16 edition of the New England Journal of Medicine.

DTC ad spending has grown on average 14% a year since 2002—to $4.2 billion a year—while total promotional spending is up about 9% a year to $30 billion, according to the study, which was a joint effort of the University of Pittsburgh and Harvard University.

The spike in spending comes just as the U.S. Food & Drug Administration seems to be easing up on its oversight of pharmaceutical company advertising. In 1997, the FDA sent 142 letters warning pharma companies that their ads violated federal laws governing how they communicate the balance between risks and benefits. In 2006, the agency sent just 22 such letters. "We didn't expect the decrease to be so dramatic," says the study's co-author Julie Donohue, assistant professor of health policy and management at the University of Pittsburgh Graduate School of Public Health. A spokesperson for the FDA declined to comment, citing pending legislation in Congress on the topic of the FDA's oversight of drug ads.

High Profits in High Cholesterol

Any TV watcher who endures the nightly barrage of ads for pills, potions, and tinctures probably isn't surprised to learn that the drug industry spends billions on DTC ads. Less obvious is the industry's skill in sidestepping efforts by the FDA and others to limit such advertising. In the past couple of years, the industry's own trade group has recommended that drugmakers delay ad campaigns for new products and a number of federal legislators are attempting to mandate DTC moratoriums.

Yet the industry continues to spend. It seems when drug companies implore patients to "ask their doctors" about a new drug, they do. "Look at the overall picture. The vast majority of marketing [spending] is influencing physician prescribing behavior," says Donohue. In fact, the three most heavily advertised classes of drugs—to treat high cholesterol, heartburn, and depression—were also the top sellers, bringing in $16 billion, $12.9 billion, and $12.5 billion a year in sales, respectively. Among the biggest beneficiaries are AstraZeneca (AZN), Merck & Co. (MRK), and Schering-Plough (SGP).

The authors also discovered that 17 of 20 campaigns for the most heavily advertised drugs began within the first year following the drug's approval by the FDA—a finding that's likely to raise the hackles of the anti-DTC crowd. Many legislators are calling for moratoriums on DTC advertising for one year or more after new drugs are approved, because it can take that long for safety issues to crop up.

Oversight Shrinks

They'd prefer that any advertising include the fullest possible picture of every drug's risks. And many of the most heavily advertised drugs, such as Nexium for heartburn and Vytorin for high cholesterol, are meant to be taken daily over long stretches of time, making them potentially more risky than drugs for short-term use.

Resources devoted to policing the content of DTC ads are sorely lacking, according to the NEJM study. The percentage of TV drug ads that were reviewed by the FDA fell from 64 in 1999 to 32 in 2004, the most recent year for which statistics are available.

Some drug industry critics are not so surprised that advertising oversight has slackened. "The question is whether the industry has gotten better at complying with the rules or the FDA has gotten worse at enforcing them. It's probably a combination of the two," says Shannon Brownlee, author of the new book Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer.

Faster Than Fast Food

The book describes how the industry fought the FDA to loosen ad restrictions on the basis of free speech, taking the battle all the way to the Supreme Court, and has since exploited the agency's rather lax rules to exert an unprecedented amount of marketing muscle. "The FDA has been beaten down by the drug industry," Brownlee says. And to great effect: Every dollar the drug industry spends on DTC advertising generates $4.20 in increased sales, Brownlee writes, outpacing the return of even the fast-food industry, which spends a similar amount on consumer advertising.

Will those seeking to muzzle drug ads just give up? Don't count on it. Says study co-author Donohue, "As long as direct-to-consumer [advertising] is around and there are concerns about drug safety, there will be efforts to restrict it."

Join a debate about TV prescription drug ads.

Weintraub is the associate editor in science and technology for BusinessWeek.

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