TV Execs Welcome Drug Ads With Open Arms

But the lucrative commercial category is under attack by regulators

By Joe Mandese -- Broadcasting & Cable

Eight years after the federal government relaxed rules restricting ads for prescription drugs aimed directly at consumers, the category has become a panacea for both Madison Avenue and the media industry at large—especially television. Now a spate of new regulatory issues threatens to severely limit or even ban some forms of prescription-drug ads.

In this story: The Heat is Rising “The Spotlight is On” A Boomer Turns 60 Every Six Seconds An Abundance of New Drugs

Chief among the ad industry's concerns is the regulatory fallout surrounding the public disclosure of serious heart-related side effects caused by two of the largest prescription-drug brands: pain relievers Vioxx and Celebrex.

The debate over the relationship between prescription-drug side effects and advertising is but one in a series of regulatory threats facing the $4 billion-plus prescription-drug ad industry, which has also been under attack for inflating the cost of proprietary drugs to defray the cost of big advertising budgets, and are even facing broadcast-indecency challenges for airing ads for drugs designed to improve people's sex lives.

The regulatory talk surrounding the pharmaceutical advertising category is also adding to the uncertainty surrounding the TV advertising business, especially the 2005-06 upfront network marketplace, which is just weeks away from breaking.

The Heat is Rising

The prescription-drug business itself is—excuse the pun—extremely healthy. A bounty of new remedies treating a wide array of diseases are ready to hit the market, but the regulatory scrutiny could cause some of the biggest and highest-profile prescription-drug brands to ease up on their advertising plans.

“The big wild card is if the government legislates anything radically different,” says the top media executive at a major prescription-drug marketer that has been part of the consumer-advertising boon. The executive, who asked not to be named, says that regulatory concerns would likely cause many pharmaceutical marketers to cut back on ad spending.

“I wouldn't look for huge growth,” he says, adding, “Things are going to level off. Number one, we've been growing at such high rates. And number two, there have been some issues. Several big spenders have had to pull product, and that affected revenues. And number three, we're operating in a fishbowl, and nobody wants to do anything that would lead to more regulation.”

As bad as that might be for pharmaceutical marketers, it could be devastating to the media industry. Ever since 1997, prescription-drug ads have been the one constant growth engine in the consumer-media marketplace, particularly for TV, which has quickly displaced print as the preferred ad medium for Rx-marketing.

Even during the worst points of the post-9/11 ad recession, the so-called direct-to-consumer (DTC) ad category continued to boom. The growth came from established drugs that were free to liberally use consumer media to advertise, as well as from a deluge of new drugs being released on the market. The category, according to estimates compiled by the Association of National Advertisers (ANA), in 2004 represented nearly $3.7 billion in TV-ad spending.

“There's no question that the heat has risen substantially with respect to the DTC category,” says Dan Jaffe, head of the ANA's Washington office, and the ad industry's top lobbyist.

Jaffe says the ad industry is most concerned by the mixed signals surrounding side effects, noting that critics of prescription-drug advertising “claim that, even after a drug receives marketing approval by the Food and Drug Administration, incipient dangers still may only become apparent once these products become widely available. The best way to protect against such dangers, these critics argue, is to impose an advertising moratorium on new drugs.”

In fact, the ANA was apoplectic when industry weekly Advertising Age ran an editorial calling for a one-year mandatory moratorium on advertising all new prescription drugs. ANA President Bob Liodice was prompted to chastise the trade magazine in a recent blog entry on the ANA's site: “This posture is an outright proxy for the FDA saying, 'We think the new drug is OK—but we aren't totally sure—so we'll try it out in market and hope no one gets hurt. And just to be sure we don't mess up too much, let's not advertise the product so the impact will be small.'”

79

new medicines for HIV/AIDS

245

new medicines for diseases that disproportionately affect the nation's 35.3 million Hispanic Americans

249

new medicines for diseases that disproportionately afflict African-Americans or for diseases among the top 10 causes of death for the demographic

371

medicines for diseases that disproportionately affect women

800

new medicines for diseases related to aging

176

new medicines for neurological diseases

122

new medicines to treat heart disease and stroke, two of the top three causes of death in the United States

Source: Greenwich Consulting Partners