Date: 5/16/2005

Creating Value Through Business Development

“The Spotlight is On”

Or, as former Federal Trade Commission Chairman Timothy Muris said during a speech at the ANA's legal-affairs conference in January, “Pressed to the extreme, this is an argument that says new drugs are fine, as long as consumers don't know about them.”

That could be an anathema for marketers, agencies and media outlets that are depending on new prescription-drug brands for sustaining the category's growth, because established brands are likely to keep a low profile while the regulatory debate is waged.

“I don't know if there is going to be a cutback in the category, but they are going to be very careful in how they advertise now that the spotlight is on,” says Jaffe, adding that Madison Avenue is fighting a number of other critical regulatory attempts, including a bill that would impose a ban on some of the biggest TV-ad spenders—the erectile-dysfunction drugs like Viagra—on the basis that they are indecent to advertise on television.

The legislation, introduced by Rep. Jim Moran (D-Va.), would ban ads for erectile-dysfunction drugs Viagra, Cialis and Levitra on broadcast media from 6 a.m. to 10 p.m. because, he claims, they are promoting sexual behavior.

Another potential threat that would affect broadcast media are prospects that the FDA would require more disclaimer copy on prescription-drug ads. It was the relaxation of such disclaimer rules in 1997, in fact, that permitted drug ads on television and radio.

“Already, disclosures are fairly sizable,” notes Jaffe. “I don't see how you can have this endless list of disclosures and still effectively advertise on broadcast media.”

Another complaint about DTC advertising—that pharmaceutical marketers mark up the costs of prescription drugs to defray the costs of big advertising budgets—has been put on the back burner, but the ANA's Jaffe says it is still part of the regulatory dialogue, with some lawmakers threatening to take away tax deductions for prescription-drug ad expenditures.

But the ANA has compiled a body of research showing the benefits of consumer advertising. By encouraging consumers to visit a doctor in the early stages of a disease or ailment, Jaffe says, advertising actually reduces long-term health care costs.

A Boomer Turns 60 Every Six Seconds

Fortunately for the pharmaceutical industry and the advertising and media companies, which tend to dote on younger viewers, Americans are getting older, more obese and sicker—and that is leading to greater long-term demand for remedies.

“There are some compelling demographic facts that support long-term growth for the DTC advertising category,” says Dan Hodges, managing director of Greenwich Consulting Partners, Greenwich, Conn. “A baby boomer turns 60 every six seconds, and the life expectancy today is in the 90s, as opposed to the 70s and 80s for the World War II generation.”

The combination of longevity, greater inactivity and obesity is leading to older Americans who suffer many more diseases and maladies over the course of their lives.

“Obesity creates many other disease states: heart disease, mental-health depression, sleep disorders, arthritis—just a general decline in health,” says Hodges, concluding, “The good news for the pharmaceutical category is, we are getting sicker. The challenge for the regulators and for the pharmaceutical companies is to find the right balance between communicating the benefits of prescription to the population [and disclosing] the risks.”

An Abundance of New Drugs

According to Greenwich Consulting Partners research, there will be abundant new drugs to communicate in both the near and long terms.

During 2005 alone, three potentially “blockbuster” drugs will be introduced: Sanofi-Aventis' Acomplia, a product for obesity management, smoking cessation and cardiovascular-health management; Bristol-Myers Squibb's Abatacept, which treats rheumatoid arthritis; and Eli Lilly and Amylin Pharmaceuticals' Exenatide, a drug that treats Type 2 diabetes.

In the more distant future, Hodges points out, there are hundreds and potentially thousands of new drugs in the “pharmaceutical pipeline” that are being developed to treat HIV/AIDS, aging, neurological diseases, heart disease, strokes, and ailments afflicting various ethnic groups.

“Long term, prescription drugs are a high-growth industry,” projects Hodges. “The only question is how much of it will be supported by direct to consumer advertising.”

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