DTC INSIGHTS News Alert
January 19, 2010
Outlook Positive for Broadcast DTC
In 2010, Television Bureau Reports
Advertising by the pharmaceutical category has begun to increase over the past few months, helping the television medium, Steve Lanzano told DTC INSIGHTS in an interview. Lanzano, president of the Television Bureau of Advertising, said the growth occurred mostly in November and December 2009, and can be attributed to two factors – more money coming into the marketplace and geographical skews of conditions.
He explained that medical conditions often are skewed by geographic region, therefore television can be beneficial for DTC advertisers – particularly for drugs targeting specific groups. For example, he said, arthritis sufferers tend to skew to the east and south-central regions of the U.S. market; back problems to the northeast; erectile dysfunction to mostly the northeast and southeast markets; and allergies and flu are more dependent on ongoing climate and geography changes. As climates change and these (allergy and flu) conditions reach different parts of the country at various times, "there is a huge opportunity there to do some real target geographic advertising," Lanzano explained. "[Marketers] can pinpoint specific area of the country."
- "There are some geographical skews that can make your dollars go farther and work harder," he stated. "Moving forward … what we are hearing is that [manufacturers] are going to do much more pin-point advertising on specialized drugs that target specific conditions."
DTC spending on TV ads rose about 4.4% in the third quarter of 2009 (to $$677 million, or a gain of about $28 million) compared with the year-ago period, according to data from The Nielsen Company. The cable sector was responsible for almost all of the increase.
The pharmaceutical advertising category is expected to continue growing due to these markets and also healthcare reform. "You are talking about a huge uninsured population that is going to be insured now coming into the marketplace and clearly that will be a big opportunity there for pharmaceutical companies," Lanzano said. However, there is some concern that Congress might act to limit broadcast DTC advertising. "That is always an issue," Lanzano stated. While pharmaceutical companies currently have the deductibility on advertising, if that were to be taken away, "clearly that would hurt the marketplace."
December 7, 2009
'Reported' DTC Ad Spending
Rebounds in July-Sept. Period
Finally, some positive news for DTC marketers, agencies and media companies. After several quarters of declining advertising spend, budgets for DTC marketing bounced back in the third quarter. According to data from TNS Media Intelligence, the “reported” spend for DTC ads in the third quarter rose to $1.16 billion in the July-September period, which represents an increase of roughly 15% compared with TNS’s “reported” spending of roughly $1 billion in the year-ago period.
This marks the first quarterly increase in “reported” DTC spending in almost two years, and it comes at a time when most advertising categories are showing lackluster growth. For the first nine months of 2009, TNS data shows DTC advertising with an increase of just under 1%. However, this compares with the 6.4% decline that TNS had reported for the first half of the year. (The Nielsen Company has not yet reported its DTC advertising spend for Q3 2009.)
Among media channels, the Internet fared better than any other medium in the first nine months of 2009. Reported spending more than tripled in the nine-month period to $221 million (this total represents display ads only). Newspapers also recovered lost advertising among DTC marketers in the January-September period, with roughly a 25% increase in “reported” ad dollars (rising to $104 million through September in 2009).
The leading advertisers by brand in the first nine months of 2009 were Lipitor (Pfizer), Abilify (Bristol-Myers Squibb/Otsuka America), Cymbalta (Eli Lilly) and Advair (GlaxoSmithKline) – each of which had “reported” spending of more than $125 million, according to TNS. Among brands “new” to mass DTC advertising in 2009, only Pristiq (Wyeth) ranked among the Top 20 advertisers on the TNS listing.
September 2, 2009
'Reported' Ad Spending for DTC
Declines 11 Percent in First Half
With the overall advertising market slipping in the first half of 2009, DTC marketers also trimmed advertising budgets in the tough economic climate.
The Nielsen Company reported this week that “reported” ad spending by pharmaceutical companies fell 11.3 percent in the first half, to $2.15 billion. This represents a reduction in “reported” spending of roughly $273 million by DTC marketers.
The overall adverting market fell 15.4 percent in the first half, according to Nielsen. The only major media channel tracked by Nielsen that showed a gain in the first half was cable television, which had advertising growth of 1.5 percent in the first half.
There are positive signs for the DTC sector. New broadcast campaigns from Pfizer (for smoking-cessation treatment Chantix) and Eli Lilly (for Cymbalta and Cialis), coupled with anecdotal evidence that marketers are stepping up digital marketing efforts to better meet consumers’ changing media habits indicates that the DTC sector could bounce back, albeit slowly, in the latter part of 2009.
The question that looms over the industry, however, is whether the ongoing healthcare reform efforts place new restrictions on consumer marketing of prescription drugs.
March 13, 2009
'Reported' Spending for DTC Ads
Falls by Almost $1 Billion in 2008
| DTC INSIGHT * Our previous forecast for a 10% decline in reported DTC spending for 2009 seems likely, given the falloff in spending late last year. It’s becoming a cliché, but “doing more with less” is going to be the theme for marketers throughout 2009 and into 2010 – and media companies will be asked to provide more evidence of their effectiveness. |
The expectations of a down year for DTC advertising in 2008 were correct. But few, if anyone, expected the decline in "reported" ad dollars to exceed 18%, or roughly $1 billion – which is the result now reported for 2008 by one ad-tracking firm.
According to preliminary data issued by The Nielsen Company today, the spending for DTC ads fell dramatically in Q4, which led to an 18.4% decline for full-year 2008 results. The "reported" dollar total for 2008 is $4.344 billion, compared with $5.325 billion in 2007. The 2008 total for DTC ads is comparable to the level of DTC spending in 2004.
The decline in spending was severe in Q4, with roughly $800 million less "reported" spending in 2008 than in Q4 of 2007, which was a fairly strong quarter for DTC activity ($1.4 billion in "reported" spending). No data on specific brands or pharma companies was available today.
Ad spending overall in the United States in 2008 fell 2.6%, according to Nielsen. The general ad market was boosted by the presidential election and spending for ads during the Summer Olympics. Among the leading national advertisers, Procter & Gamble and General Motors reduced their ad spending in 2008 by 19% and 15%, respectively. Johnson & Johnson trimmed ad spending by 5.4%.
November 20, 2008
Rep. Henry Waxman Wins Battle
To Chair a Key House Committee
| DTC INSIGHT * As tough as he's been on pharma, Rep. Henry Waxman will not be able to shut down DTC advertising, but as chairman of the Energy and Commerce Committee he certainly will be able to make life more difficult for marketers and media companies. Indeed, you can count on more hearings on DTC advertising in 2009. Waxman “is no friend of DTC advertising,” as one Washington insider noted recently. It's also possible that Waxman will make an effort to bring OTC advertising under the purview of the FDA next year, which could further slow healthcare-related marketing efforts. |
In a shift that portends more difficulty for pharmaceutical marketers next year, Rep. Henry Waxman (D-Calif.) was elected today by House Democrats as the next chairman of the House's Energy and Commerce Committee, the important Congressional committee that has oversight of the Food and Drug Administration.
Waxman earlier this month challenged current committee chairman Rep. John Dingell (D-Mich.) for the chairman's role. On Thursday, he won a secret ballot vote, 137-122, among Democrats in the House. The selection of Waxman signals “a leftward turn for the Democratic agenda,” The Hill reported in a story posted to its Web site earlier today. The newspaper also noted Waxman's win represents a victory, “at least in perception,” for House leader, Nancy Pelosi (D-Calif.).
For pharma, however, Waxman stands as a significant threat to direct-to-consumer advertising, which he has long opposed. Waxman in the past proposed legislation calling for mandatory pre-clearance of DTC ads, and for a moratorium on new-drug ads for two to three years. Waxman also is likely to play a key role in President-elect Barack Obama's effort to create a national healthcare program. When Rep. Dingell chaired this House committee, he called a hearing to question marketers on leading DTC brands, including Lipitor and Vytorin, in May of this year, and then sought strict voluntary controls on marketing from the companies that testified at that hearing.
“If Rep. Waxman does become chair, we have to be prepared for immediate scrutiny on FDA matters,” Adonis Hoffman, a general counsel of the American Association of Advertising Agencies, told reporters earlier this month. “DTC becomes front and center.”
October 2, 2008
Rep. Emanuel Wants to Change
Tax Status of DTC Marketing
| DTC INSIGHT * A proposal to eliminate the business-expense deduction for DTC is not likely to stand up in court, but it could create a messy situation for brand advertisers and media companies in the short term. More importantly here, however, are the signals that anti-DTC sentiment is being ratcheted among Democrats, which could lead to serious trouble in 2009. |
Rep. Rahm Emanuel (D-Ill.) has warned advertising industry leaders that the business-tax deduction for DTC spending could be taken away in 2009 tax legislation. Rep. Emanuel's comments are seen as an important indicator of how a Democratic-controlled House could step up the pressure on DTC under a new administration in 2009.
In a September meeting with the Government Affairs Committee of the American Association of Advertising Agencies, Rep. Emanuel was said to present two options for the pharmaceutical industry in new tax legislation: retain the tax credit for research and development spending, or keep the business expense deduction for DTC advertising -- but not both. "He said this without any tinge of satire, so you have to accept him at his word," said one advertising industry advocate familiar with the meeting. (Note that an average pharmaceutical company spends roughly 10 times more on R&D efforts every year than is actually spent on consumer promotion.)
Rep. Emanuel's office was asked to comment on the topic earlier this week, but had not responded as of Thursday morning. Rep. Emanuel sits on the House's Ways and Means Committee, which controls and writes all tax legislation, and he also chairs the House's Democratic caucus.
The idea of "taxing" DTC advertising has been around for many years, most notably in a bill sponsored in each Congress by Rep. Pete Stark (D-Calif.), the second ranking Democrat on the Ways and Means Committee and chairman of its health subcommittee. Stark's proposal has not gained traction in the past.
If the Ways and Means Committee were to move toward a change in the tax status of DTC, the industry would argue that such a move is unconstitutional. "The motivation, it can be clearly argued, is not sound tax policy, but the motivation is to suppress speech," said Jim Davidson, a Washington-based attorney with the firm Polsinelli. "When you use the Tax Code to suppress speech, that is a violation of the First Amendment."
September 10, 2008
Nielsen's 'Reported' Spending Total
Shows 9% Drop for Second Quarter
| DTC INSIGHT * The market decline is temporary and will recover with new-brand introductions. There is no indication companies are abandoning or rethinking DTC as a key promotional device. The fact that Lipitor came back to DTC is a good indicator of its value. |
With seven major DTC brands cutting $40 million or more from their consumer budgets in the first half, the total “reported” spend for DTC dropped 9% in the second quarter and 4.8% for the January-June period, according to Nielsen Monitor-Plus. The total “reported” spending fell by roughly $130 million in Q2 after a flat “reported” spend in Q1. (Note the Nielsen Monitor-Plus totals do not include online promotion in either period.)
The seven brands that significantly reduced first-half spending (and the amounts of “reported” cuts) are: Lunesta ($99.2 million), Rozerem ($88.5 million), Requip ($78.7 million), Lipitor ($62.9 million), Zetia ($50.6 million) Nexium ($48.8) and Vytorin ($44.9 million). Total spending in the first half was $2.6 billion.
Marketers also significantly cut back on disease education advertising in the first half, trimming roughly $51 million (or 30.6%) from their unbranded marketing budgets in the period. Among the campaigns with the steepest cuts in reported spending were Roche's ads for the flu virus and ads about depression sponsored by Wyeth.
"These declines show that big pharma will start looking to do more with less and that will require more analysis and understanding of how to squeeze media value," said Bob Ehrlich, chief executive of DTC Perspectives and chairman of the upcoming DTC in the Era of Consumer Choice Conference. (The conference is scheduled for Oct. 29-30 in Livingston, N.J., and, among the modules, several presentations will address media mix and improving ROI in a new consumer environment.)
This is the second time in the past three quarters that DTC advertising has recorded significantly “down” results, according to Nielsen Monitor-Plus data. While DTC spending fell less than 1% in Q1 of 2008 (or less than $1 million on a base of roughly $1.3 billion), the drop in last year's Q4 was a more daunting 15.2%.
MORE INFORMATION:
June 19, 2008
Pressure Mounts on Drug Marketers
To Impose New Restrictions on DTC
|
DTC INSIGHT * The move to mollify Dingell and Stupak could put PhRMA on a slippery slope, even if most companies already voluntarily follow a limited moratorium policy. However, giving any further concessions is not a move that will be met with popular support among the DTC marketplace. Dingell and Stupak are certainly powerful adversaries, and this will be a tough fight, but one that's critical to the future direction of DTC marketing. |
None of the companies – Pfizer, Merck, Johnson & Johnson and Schering-Plough – would agree to the two-year moratorium request, but had instead agreed to a six-month waiting period. The companies also declined to accept the Congressmen's request that no DTC ads run until after a valid outcomes study of the product is completed and the results are public.
The exchange between the companies and the Congressmen, however, seemingly does not take into account many of the DTC-related provisions of last year's FDA Amendments Act (which did not include a moratorium on DTC ads). “I am concerned about the direction we're heading,” said Jim Davidson of Davidson & Co., a
John Kamp, executive director of the Coalition for Healthcare Communication, said he respected the companies decision on the six-month moratorium, but raised concerns about whether First Amendment rights were being surrendered. “The First Amendment is not just good law, it's smart public policy,” Kamp said. “It's time for some politicians to give consumers and the First Amendment more respect.”
More DTC hearings ahead?
Representatives of the four companies had testified at a May 8 Congressional hearing on DTC marketing before Stupak's subcommittee of the House's powerful Energy and Commerce Committee. Dingell and Stupak commended the companies for voluntarily accepting two of their requests – to follow AMA guidelines on use of physicians in ads and not to include off-label claims in DTC ads.
However, these and other issues will have to be resolved. Dingell noted in his response that this exchange “is the first part of an ongoing review of DTC advertisements… Our investigation is not over, as more work clearly needs to be done on this issue.”
June 3, 2008
Shows No Growth in First Quarter
|
DTC INSIGHT * Given the current economic climate, the Q1 reported spending data should be viewed as a positive development for media companies and ad agencies that are heavily focused on DTC advertising trends. The big decline in DTC advertising in last year's Q4 is beginning to look more like an anomaly rather than the start of a downturn. DTC INSIGHTS continues to forecast a 0 to 3% growth rate for reported DTC spending in 2008. |
The “reported” spending for DTC advertising was off slightly in the first quarter of 2008 (declining less than $1 million on a base of roughly $1.3 billion), according to Nielsen Monitor-Plus data. Even with no ad-spending growth in the quarter, however, the results marked a turnaround for DTC marketing from last year's fourth quarter, when reported spending declined 15.2%. That marked the first time in 10 years of DTC that reported spending dropped in a quarterly period.
The spending in Q1 2008 as reported by Nielsen Monitor-Plus was $1.2927 billion, compared with $1.2935 billion in the year-ago quarter.
The two top media channels struggled in the Q1 period, with DTC advertising on network TV falling 3.3% (excluding pharma corporate advertising) and print DTC in consumer magazines down 2.5% (again excluding corporate ads). Network TV captured almost 34% of all measured DTC advertising in the period.
Among brands, a decline in spending by the leading sleep remedies was offset by major campaigns from five “new” brands (they did not advertise in Q1 2007, all of which had reported spending of more than $20 million): Veramyst (GSK), Celebrex (Pfizer), Mirapex (Boehringer Ingelheim), Chantix (Pfizer) and Symbicort (AstraZeneca).
The sleep treatments Lunesta (Sepracor), Ambien CR (Sanofi-Aventis) and Rozerem (Takeda) trimmed DTC spending in the Q1 period by 42%, 33% and 74%, respectively. The aggregate total spending cuts for the three leading advertisers was more than $80 million, according to Monitor-Plus data.
MORE INFORMATION: The June issue of DTC INSIGHTS will publish a more detailed analysis of the Q1 spending trends. For information on subscribing, send an e-mail to Jennifer@dtcperspectives.com.
May 1, 2008
For Important Hearing on DTC Ads
|
DTC INSIGHT * This hearing is bound to generate headlines and news coverage showing DTC in an unflattering light. The key question is whether it will lead to a re-opening of last year's discussion of a DTC moratorium for newly approved drugs. We believe it will not, given that the economy, the election and war in Iraq are of higher precedence as this session of Congress winds to a close. |
DTC advertising is expected to come under intense scrutiny Thursday, May 8, as a subcommittee of the House's Energy and Commerce Committee examines the role DTC advertising plays in marketing to consumers and its influence on physician prescribing. The subcommittee on Oversight and Investigations is chaired by Rep. Bart Stupak , a Democrat from Michigan who was highly critical earlier this year of Pfizer's use of Dr. Robert Jarvik as a spokesman for Lipitor.
Stupak, who works closely with Energy and Commerce chairman Rep. John Dingell (D-Mich.), has been looking into DTC advertising for the past several months, and has noted in statements that ‘drug companies should know that they will be held accountable for the representations made in their ads.” Rep. Henry Waxman (D-Calif.), another foe of DTC advertising, also is a member of this subcommittee.
Representatives from Pfizer, Merck, Schering-Plough and Johnson & Johnson are expected to testify at the hearing. The subcommittee also is expected to hear from Kaiser , the Government Accountability Office and American Medical Association . In addition, linguist Ruth Day from Duke University is expected to make an opening statement to the subcommittee.
If the official title of this hearing is an indication – “Direct-to-Consumer Advertising: Marketing, Education, or Deception?” – the mood of the Capitol Hill get-together could be tense for pharmaceutical company executives fielding the questions. The advertising of Vytorin, co-marketed by Merck and Schering-Plough, also is expected to be a key focus of the legislators.
MORE INFORMATION: To view details about the hearing, see the Energy and Commerce Committee's Web site and hearing schedule at the following URL: http://energycommerce.house.gov/membios/schedule.shtml.
February 25, 2008
Reporting ‘Side Effects' as of March 25
|
DTC INSIGHT * This new requirement technically is in effect for all magazines that carry April cover dates, although it seems unlikely DDMAC will issue violation letters on this requirement right out of the gate. Expect perhaps a minimum one-month grace period, but understand that there's a risk involved with any delay. For broadcast ads, given that there's a required study on the topic, it's unlikely such a requirement could be put in place before late 2009. |
Marketers using "published" DTC ads in their media plans beginning March 25 are required to include specific information in the ads on how to report adverse events to the FDA, and this information must be printed "in conspicuous text." The new requirement, established in last year's FDA Amendments Act (FDAAA), affects only print ads at this time. The requirement is not applicable to Internet or television advertising, according to a DDMAC official, but the rules could change in the future.
Kristin Davis, deputy director of DDMAC, provided an update on the adverse-event reporting requirement at last week's Drug Information Association conference in New York. (See the required wording for this text at the bottom of this Alert.) Asked about the agency's recommended placement of this text within the print ad, which is not defined in FDAAA, Davis said:
- "To satisfy that requirement, we do consider it extraordinarily likely that it should be in the main body of the advertisement…. One place that would make a lot of sense is after you list your adverse events because it's about reporting adverse events."
There have been many questions about what types of advertising the requirement applies to, Davis acknowledged. She noted that the statute is specific to "published" advertising. "If it's a labeling piece, and considered that way or if it's not defined as advertising, then we don't consider [the statute] to apply, but you are certainly welcome to include the statement in those materials." With respect to broadcast ads, the FDA expects to conduct a study at some point in the future to determine whether this statement is appropriate to for TV advertisements.
"If we do decide that this is appropriate for TV ads, we will have to issue regulations requiring it to be in TV ads and also determining a reasonable length of time for displaying it," Davis said. Asked about enforcement plans and penalties for not complying with the statute as of March 25, Davis told DTC INSIGHTS, "It would be a violation [and] we could take action. But at this point, we're not ready to say we will."
MORE INFORMATION: The wording of the required text for print ads is: "You are encouraged to report negative side effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch, or call 1-800-FDA-1088."
To view a copy of the FDA Amendments Act, click on the link below. This new requirement is outlined in Section 906, Title IX, of FDAAA. http://www.fda.gov/oc/initiatives/HR3580.pdf.
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