Xpectives News

DTC in Perspective: The Perfect Storm Faces DTC

October 9, 2015 by Bob Ehrlich0
Bob Ehrlich
“DTC should survive no matter who wins the election…”
-Bob Ehrlich

I am concerned. DTC is under attack again by politicians and anti-drug company activists. While an outright ban is highly unlikely because of first amendment protections, it is possible to regulate DTC more and/or use tax policy to restrict its use.

The FDA, under a Clinton or Sanders presidency, would likely be told to do what it can to make advertising more difficult. That 1997 guidance allowing television to be done in 60 seconds was a liberalization of the interpretation of the rules. Does FDA have the authority to go back to the pre-1997 interpretation that required a full scroll of the package insert? Does free speech make that return to the restrictive old days unconstitutional?

While I would expect President Clinton or Sanders to try to ban DTC through FDA, I doubt the courts would allow it. Clinton and Sanders can alternatively ask FDA impose guidances to make advertising more difficult under the guise that consumers are overstating advertised drug effectiveness. They could then require more discussion of non-drug alternatives or increased discussion of comparative effectiveness to non-branded drugs.

Tax policy is a real threat by making drug ads a non-deductible expense. Of course, such a move would also restrict commercial speech as it would only apply to the drug industry. Courts have a dim view of government restriction of commercial speech. I doubt the advertising lobby would lose such a fight. You never know, however, until a law is enacted and tested in the courts.

Another threat to DTC may be the industry itself surrendering to pressure. Some drug executives may decide they do not want to deal with the critics any longer and just stop using DTC. They can decide to use other less public means of promotion. Of course it might be hard to stop DTC because it works so well for many brands. Drug executives have seen many brands succeed because of widespread awareness ads. Drug CEO’s may, however, surrender DTC in exchange for no Medicare price negotiation, no foreign drug imports, or patent life extensions. Most CEO’s are not consumer marketers and have no inherent love of consumer advertising.

My net is DTC should survive no matter who wins the election. It may, however, be faced with an FDA pressured to make DTC harder to execute. That could mean more onerous rules and more delays in approval. It could also mean more “voluntary” moratoria on advertising new drugs as a condition of approval. DTC spending continues to recover, and 2015 could be $5 billion again and higher spending is always erroneously blamed by critics for causing rising drug prices.

I urge my drug marketing colleagues and their agencies to take threats to DTC very seriously. Drug companies are easy targets and Congress is known for taking the easy path. Finding a way to punish branded drug companies by restricting advertising would be politically popular. Combine a pliant Congress with President Bernie or Hilary and watch DTC be placed on the endangered species list.

Anyone involved in DTC should make sure their representatives in Congress hear why restricting DTC advertising is a bad idea. The total spent on drug advertising is only about 1.5-2% of drug sales in the United States. That money, if no longer used for DTC, would not lower drug prices, despite the myth that drug companies price high to recover their DTC investment. Sales would in fact be lower if DTC were banned, and that would lead to cuts in research, not increases.


Bob Ehrlich

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