The Drug Advertising Debate

Some members of Congress want to limit Big Pharma's ability to promote products directly to consumers. But the roadblocks are high

by Arlene Weintraub

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If Representative Henry Waxman (D-Calif.) had his way, the little butterfly used to advertise the insomnia remedy Lunesta might not be allowed to flutter all over our TV screens, as it has incessantly since the drug was approved in late 2004. Waxman believes the U.S. Food & Drug Administration should be able to forbid companies from advertising directly to consumers until new drugs have been on the market for at least three years. He tried to mandate such a restriction by attaching it to a drug-safety bill. But on July 11 he came up short. After a debate centered on drug companies' right to free speech, the bill passed with virtually all restrictions on drug advertising stripped out (see BusinessWeek.com, 8/6/07, "Dispense with TV Drug Ads").

The end of Waxman's proposal, however, may be the beginning of a fierce new debate over drug advertising. Critics are increasingly concerned that the ads encourage consumers to demand drugs they don't need, and in the process put themselves at risk of suffering dangerous side effects. A moratorium on advertising, some say, would give the FDA and drugmakers more time to understand the risks a particular drug poses before they plaster it all over the media.

With Democrats resurgent in Washington, some members of Congress are coming up with alternative ways to limit drug marketing. Representative Pete Stark (D-Calif.) has introduced a new bill that would prohibit pharma companies from claiming tax deductions for ads promoting drugs that have been on the market for less than two years. Hitting the industry where it hurts—the bottom line—is his attempt to discourage the advertising while circumventing freedom-of-speech concerns. Drug ads, he says in an interview with BusinessWeek, "don't tell the whole story. We need to give people time to understand the pros and cons of a drug."

Revolt on Madison Avenue

It's an almost uniquely American phenomenon. Only one other country in the world—New Zealand—allows drug companies to market their products directly to consumers. All others deem it too dangerous. However unusual, marketing drugs to consumers has become a huge business. Since 1997, when the FDA relaxed the rules on Big Pharma's television marketing, drug advertising surged to $5.3 billion in 2006, up 14% from 2005, according to TNS Media Intelligence. Ad spending in the pharma sector grew faster than that of any other industry among the top 10 spenders, including autos and telecom. And the three most heavily advertised drugs—Lunesta and Ambien CR for sleep, Cymbalta for depression—were approved just in the past three years.

The prospect of all that lost ad revenue is enough to get a lot of industries reaching for the heartburn medicine. (Perhaps Nexium, the fifth most heavily advertised drug of last year?) The revolt against Waxman's bill was led by three members of Congress from New York, home to most of the major TV networks and ad agencies, not to mention drug giants Pfizer (PFE) and Bristol-Myers Squibb (BMY).

Critics say it's no coincidence that the opposition to the ad moratorium came from the part of the country that has the most to lose. "Public policy is about capital, not public interest," gripes John Abramson, clinical instructor at Harvard Medical School and author of the book Overdosed America, which explores the commercialization of health care. Abramson adds that there are now two drug lobbyists for every member of Congress, up from one when his book was published in 2004. None of the three members of Congress—Edolphus Towns (D-N.Y.), Anthony Weiner (D-N.Y.), and Eliot Engel (D-N.Y.)—responded to BusinessWeek's requests for interviews.