The latest from DTC Perspectives

Business Week on DTC

Business Week did an article (11/9) on how DTC spending may not produce a positive ROI. The study used to support that assertion was a Verilogue report based on audio recorded conversations between patients and physicians. In only 23 of 12,500 conversations did patients ask for a drug by name. On that basis Business Week questions the effectiveness of DTC.

I know this Business Week report will create senior management questions to the DTC marketers at drug companies. Why should we do this anymore if no one is asking for our products? The reality is that DTC effectiveness is a combination of many factors. Patients need not ask for a brand name but merely ask about treatments for a condition for DTC to be effective. Leading brands are helped by category discussions initiated by patients. Second, DTC creates a set of well-known brands and if a doctor mentions a drug, consumers are more receptive because they have heard of it through DTC. Third, having DTC accelerates physician awareness and education as no physician wants to seem unaware of a new advertised drug. Finally, DTC can help get on a formulary as plans know they will receive requests for new drugs from their members.

There are numerous quantitative studies showing average effectiveness of 2 to 1 return. There is one cited often from Harvard that says 4 to 1. These studies measure all variables affecting DTC effectiveness, not just patient initiated conversations. There is no doubt some brands get negative returns on their DTC as the many prior quantitative studies conclude. DTC is clearly not for every brand but most brands still see excellent ROI.

The good news in this Verilogue study is that critics can see they vastly over state the threat of DTC and at least the study should show Henry Waxman there are more important things to worry about. As I said in numerous prior columns DTC is a tactic to improve sales not the fundamental driver of sales. For blockbuster drugs like Lipitor DTC may account for an incremental 1-2% of sales. I hope critics see this Verilogue study as proof that DTC is not a threat to health care cost control. DTC is, in most cases, a profitable promotion tactic and does not create blockbusters. The best DTC campaigns may provide a higher boost to sales, maybe up to 10% of the total for lifestyle drugs. The bottom line is that DTC may account for about $10 billion of added sales out of a total of over $200 billion annually spent on Rx drugs.

DTC supporters should welcome any new data and I am sure the Verilogue study will be dissected for useful ideas to improve DTC. As for a measure of ROI, however, I would trust the major research houses' hundreds of well-controlled brand studies indicating for most brands' DTC does indeed pay-out.