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Treato, an online consumer insights company, released a survey on DTC 4/18. It was done with 529 Treato.com consumer users. The headline in their press release that said “Treato Finds DTC Pharma TV Advertisements Have Little Influence”. They cite a result that only 7% of respondents asked their doctor about an advertised drug this year compared to 21% last year.

When you do a survey and get some strange results like a decline from 21% to 7% you have to ask why. There is no reason that consumers would react so differently year to year. You have to question the methodology, the panel who responded, or some other factor. People would not find 2015 advertising so much less influential than 2014 advertising.

Treato did not analyze what TV ad influence means in terms of ROI for drug companies. Television ads payback, and the evidence is overwhelming. Whether the real consumer request number is 7%, 21% or anywhere in between, the drug makers look at the value of consumers who do request based on their ads. For many branded drugs 7% would be a great number.

The drug industry does not expect their ads to influence a majority or even a large minority of consumers. They know most consumers rely entirely on their doctor to tell them which drug to use. The drug makers hope a large enough segment of a potential user population see an ad and ask their doctor.

I remember the launch campaign for Lipitor had a marginal share boost. That marginal boost, however, was a great ROI on our investment. So Treato may be correct that TV has less influence than the DTC critics give it credit for having. Maybe Hillary will see that DTC is not the force for evil she contends in her speeches.

When you examine any blockbuster drug performance DTC has a marginal influence. Lipitor spent about 100-150 million on DTC in its peak days. It was doing over 5 billion in sales. So it probably generated 200-300 million in incremental sales from DTC. Maybe it had 4-6% influence. I think that percent would be a fair estimate for most billion dollar plus drugs doing television DTC.

Treato suggests that drug companies look for other ways to influence consumers. This statement misses the ROI truth. Drug marketers will use any medium that pays back. Television may not be seen by media pundits as innovative, but drug marketers are evaluated on ROI success, not how much they experiment. Television ROI is less than some other more targeted techniques like Point of Care. Drug companies do both to achieve their goals.

So Treato’s headline has some truth despite the odd decline they state from 21% to 7%. Their term “little influence” has very different meanings to drug company marketers and DTC observers. A little influence can generate a great ROI on premium priced drugs. For most brands’ mass media plan it is 1.5 to 3 to one. Pharma lobbyists should tout this survey to DTC critics showing there is no need to be concerned that consumers are being hypnotized by television into mass use of drugs.

The FDA is becoming very active in DTC research. By my count they have identified ten studies that are in process to be fielded. Their glacial pace of completing their studies is well known so I am not sure when these ten will be completed and published. I know the people doing the studies are well qualified professionals who are hampered by government procedures that slow down the process. They go through numerous mandated public comment periods and have to get budget approval from Office of Management and Budget bureaucrats. It is unfortunate that after 20 years of DTC, FDA is still doing basic research that should have been done 15 years ago.

FDA is doing some important studies and some that I question for their usefulness. On the positive side they are doing an important study on shortening the risk statement to focus on the major risks rather than the long litany of risks in many ads. They are also doing important work in the area of price discussion in DTC ads. FDA is also studying how to convey quantitative clinical information in understandable visuals. A fourth study which is important is how to measure the impact of superimposed text on the screen, as to size, contrast to background, and use on mobile devices.

FDA is also doing a major consumer attitude study on DTC, which was last done in 2002. This is long overdue and might be the most important of all their proposed studies. With all the criticism from payers, politicians, and physicians it is critical to get comprehensive consumer feedback.

There are a few studies I find less useful. One is measuring DTC television ads impact on the hard of hearing. One can assume that anyone who cannot hear well will have trouble with the audio and have less comprehension. This is one of those studies without a practical purpose. What are drug makers supposed to do differently? Are they supposed to have special ads for the hearing impaired?

Another study is one done with teens on ADHD drugs. Does it matter what teens take away from DTC ads? Their parents and physicians are the gatekeepers. Again what is a drug maker supposed to do when advertising ADHD drugs? Are they expected to make sure teens understand risk/benefit?

One thing FDA needs to do is better communicate the research results to the DTC community. Their findings should be announced and summarized in user friendly formats. It is ironic that an agency dedicated to improving consumer communication does a mediocre job of organizing and releasing their data. They need to have an easy to understand summary chart of each study with objectives, findings, conclusions, and next steps. No business person would accept the current way of communication and neither should FDA. Hopefully their web site will be better run and targeted to the people who actually are expected to act on their research.

For many years  media pundits have predicted the end of broadcast/cable television as both a dominant medium and as a successful seller of ad space. As a DTC information provider we at DTC Perspectives are media agnostic. We believe in DTC but do not choose one advertising medium to favor. That neutrality has us question the media pundits that say television is a dinosaur waiting to be hit by an extinction event. Every year at the DTC National I ask new media presenters why drug marketers still spend so much on mass media if digital/mobile is replacing it. They usually say drug companies are slow adopters and their agencies steer them to television because it is easier to buy.

I usually push back to say drug marketers and their agency associates are smart folks and would not use a medium that does not work. After all, their career success is based on drug sales response to their media selections. They use television because it generates a strong ROI and  can have a fast market share impact. It also puts pressure on insurers to cover reimbursement and motivates doctors to learn about a drug faster.

Despite the dire predictions, television use for DTC advertisers has never been stronger. The latest Nielsen data show television got 68% of the spending in 2015. Nielsen does not measure point of care and understates Internet spending. If we add those numbers  which trade sources say are about $500 million for point of care and around $250 million for Internet, then we have about $6 billion in total spending with television still comprising 59%.

Why has television remained dominant when other industries have spent much more in digital? There are several reasons for the wide use of television for DTC advertisers. Most important is the age of the majority of prescription drug users. The largest drug categories are dominated by older users. They do use the Internet a lot but still watch more television than younger folks. Second, drug ads can be executed well in the 60 second television ad unit and still meet regulatory requirements. In other words television allows for motivating messages. Third, DTC is serious information and that is why the drug makers dominate network, and cable news shows.

I should mention that print spending is still quite healthy. FDA still requires a print brief summary source be mentioned in the television ad. While print titles are declining those that remain are seeing over $1.5 billion in revenue from DTC advertisers.

The health of television does not mean drug marketers are ignoring digital and point of care. New techniques are growing in each area. Point of Care has exploded, and digital is finding a way to introduce drug and disease awareness despite FDA limitations.

I am sure many media pundits in 1997 would be surprised to see television so strong in 2016. Time shifting through DVR devices, Netflix, on-demand options, as well as competition from game apps were predicted to drastically reduce broadcast television use. While teens and millennials may be watching less, and shifting to watching their television on demand, the drug using  baby boomers and their parents still watch a lot of broadcast and cable. Of course eventually the pundits may be correct and television as we know it will be extinct, but it looks like a decades away event.

DTC spending continued its strong comeback in 2015, following a strong 2014. Spending was $5.17 billion in 2015 according to Nielsen, the best performance since 2007 when $5.33 billion was spent. Fueled by many new product launches, DTC advertisers spent heavily in 2015. Some of the biggest newer spenders were Xifaxan, Toujeo, Belsomra, Breo Ellipta, Harvoni, Trulicity, Jardiance, Namzaric, and Brilinta.

The new spenders are across a wide array of categories including irritable bowel, diabetes, insomnia, COPD, Hep C, Alzheimer's, and blood thinners. Returning to the $5 billion level is a strong recovery from $3.47 billion in 2012. In 2013, the DTC recovery began with $3.8 billion followed by $4.53 billion in 2014 and $5.17 billion in 2015.

The recovery has been fueled by both new products and a realization by drug companies that DTC is essential to drug success. DTC has largely been used for large incidence categories like cholesterol, depression, and diabetes. What has been a new trend is use for more limited incidence diseases like advanced stage cancer, Hep C, binge eating, sleep disruption for the blind, and advanced heart failure.

Many drugs with high annual price tags have started to use DTC heavily. Provenge, Harvoni, and Opdivo are a few of the drugs, costing up to $100,000 a year, to begin using DTC in the past few years. DTC is now seen as a way to raise awareness of premium price drugs which are harder to get on formularies. Ads create demand and put pressure on insurers to cover those premium priced drugs.

DTC spending should continue to grow in 2016 but likely will slow its growth rate. It is entirely possible we will see the 2006 record of $5.4 billion eclipsed. This is welcome news to media companies who have counted on DTC as a key revenue contributor. With higher spending comes more criticism from the army of drug company bashers. Despite the constant criticism, drug companies are eager to advertise because DTC works in creating consumer awareness and eventual higher sales.

In 2012, some industry observers and a few pharma executives were saying DTC was dying. That pronouncement was obviously premature given spending increases in 2013, 2014, and 2015. We who work in DTC have to continue to defend the use of consumer advertising. Critics will try to take away the right to advertise and our industry must provide the positives of advertising to politicians, the media, regulators, and consumers. Clearly drug companies have shown the desire to allocate more resources to DTC and should continue to do so in 2016 and beyond.

There are several candidates talking about the high costs of drugs. The Republican front-runner, Donald Trump, has said in his town halls that we could save $300 billion a year by negotiating pricing through competitive bidding. Bernie says drug companies make outrageous profits and through a single payer system, he would dramatically lower costs. Hillary says there will be a monthly cap on what Americans will pay for drugs, and she will institute Medicare price controls, and end tax deductions for DTC.

Mr. Trump has greatly exaggerated the potential savings. Medicare spent about $85 billion on prescription drugs through its Part D program in 2015. Total spending for drugs in the United States was $374 billion in 2014. Assuming price negotiation through Medicare can match Canadian prices, Medicare could save about 30% or $25-26 billion. Assuming private insurers would use these new Medicare prices to help negotiate harder, maybe they can squeeze another 10% out of drug makers. That would add another $28-30 billion.

Let’s say the public and private sector savings add to $53-56 billion annually. And for sake of argument let’s assume both Bernie and Hillary plans get the same. What happens to the drug industry losing $53-56 billion in revenue? About 85-90% of the lost revenue would be profit. That means about $45 billion. Total drug industry profits are in the $100 billion range.

What would happen to an industry that loses 45% of its annual profit? Massive layoffs in all areas of operations, relocation of jobs that remain to China and India, slashing of research budgets, and a focus on less risky drugs would occur. Bernie may think drug companies make outrageous profits but he has no experience how businesses work since he never had a regular private sector job. High risk industries need large incentives to take risks. Many drug companies fail in their research efforts and lose billions doing so.

Assuming Mr. Trump or Hillary succeed in price controls, they will turn the drug industry into a quasi government contractor. New drugs will be those that government agrees to subsidize. That means many smaller disease categories will be ignored as government will focus on the diseases that impact broad populations.

Expect drug marketing to disappear under a government dominated system. Medicare under its price negotiation authority would discourage, if not outright ban drug advertising. After all they do not want Americans to use expensive drugs. All of us in DTC will need to find other work.

There may be private innovators who still develop breakthrough drugs. It will be harder under reduced pricing and I suspect fewer small drug companies will get venture capital. Government will have an increased role in basic research and drug companies will be secondary. Nationalizing R&D sounds great to socialists, but how many new drugs came out of the Soviet Union?

An electorate hostile to drug companies may actually buy into the narrative that price controls work. Our total health expenditures are about $3 trillion in the United States. It would be shame to gut the vital drug industry for a $50 billion saving. Next time we see an Ebola outbreak, a Zika like virus, a new flu, or a drug resistant bacteria, we will want a vibrant drug industry to give us cures. While politically popular to rail against drug companies, the American people need to understand the unintended consequences from a punitive approach to drug profitability.

Rosa Delauro, a Democrat congresswoman from Connecticut, introduced bill H.R 4565 on 2/12/16 that bans DTC ads in the first three years from approval. It also allows the Secretary of Health and Human Services to continue the ban if the drug has had significant adverse events during those three years.

The drug companies can apply to do DTC and the Secretary can approve if it is a positive for public health. Obviously this bill is meant to permanently kill DTC since the adverse event standard is so vague the Secretary can point to them as an excuse to continue bans after three years.

I doubt this bill has any chance to get voted on. First, it is unconstitutional to ban commercial speech without proving the ban is the only way to protect public health. Second, the bill is so vaguely written as to allow such broad and arbitrary authority to the Secretary as to make it clearly a ban of speech. Third, the idea that commercial speech must first apply for that right and prove public interest in advance is unconstitutional.

This bill is merely a political statement from a hard core Liberal democrat. It is the type of nonsensical response from a politician who has no interest in understanding the real cost of drug development. Ms. Delauro prefers to blame advertising for drug prices being high. Somehow, she believes, that if only drugs could be prohibited from advertising, prices would drop dramatically. This is absolutely false and has no basis in fact.

While this bill will go nowhere it does show there is an appetite among Democrats to make drug companies a campaign cause this year. We can expect more bills to end DTC tax deductions, allow foreign drug imports, force drug companies to disclose promotion spending, give Medicare price negotiation authority, and limit patent life.

Any bill introduced in Congress that limits DTC is serious and sets a dangerous tone. The drug companies, media suppliers, and advertising agencies need to call their representatives to voice their opposition. The drug industry employs over 800,000 people directly in the United States and over 3 million indirectly rely on it for jobs. Those jobs can only survive with a profitable drug industry not singled out for punitive treatment. China and India would love to have those jobs and politicians need to be careful vilifying our vitally important drug business.

Novartis has just started a non branded disease education campaign called “Keep it Pumping.” You can see the television ad on the Novartis web site: www.keepitpumping.com. This Novartis web site discusses the serious condition of heart failure which has only a 50% survival rate after five years from diagnosis.

The ad is very memorable, showing a man sitting in his living room as it fills with water, a metaphor for the rising danger of a heart not pumping well. I have read some physicians are concerned the ad is alarmist. They think the ad will stoke unnecessary fears among patients. Obviously Novartis thinks the serious tone is appropriate.

Like all drug companies that do disease education ads, Novartis is running the campaign because it has a new drug to treat heart failure. The drug was approved mid-last year. It is called Entresto, a combination of an old drug, valsartan and a new drug sacubitril. Novartis clinical studies show it is significantly better at reducing mortality versus ACE inhibitor enalapril.

While the ad apparently annoys some doctors, it is certainly memorable. The visual of a flood in a man’s living room while he seems oblivious to it is a good way to show the hidden symptoms and dangers of heart failure. The appropriateness of running an ad that may alarm patients is a legitimate issue. On the other hand, any disease that causes death in 50% of those who have it, is cause for alarm and therefore having an impactful campaign is warranted.

Like all these newer premium priced drugs, the advertisers will face sticker shock from those patients who have problems getting reimbursement or have high co-pays. The recent trend for drug makers has been to advertise drugs regardless of price. They want to create demand as this helps push reluctant payers to cover the drug. Most insurance companies would prefer patients use much cheaper, albeit, less effective old line treatments. DTC for newer drugs is trying to create patient awareness that there are very effective treatments now available. Cost/benefit will be debated by the payers and patient demand has been an important dynamic in pushing payers to cover the newer treatments.

I doubt many Americans who see this ad will suffer undue alarm. Basically, it is designed to get people to be aware that heart failure happens to many of us as we age. The incidence is about 20% over our lifetime. Novartis clearly benefits from encouraging discussions on heart failure because their new drug is premium priced.

I definitely disagree that the ad creates undue fear. Heart failure is not acne, or toe fungus and perhaps a sense of urgency is needed in the creative approach. People who see the ad who might be at risk for heart failure should discuss it with their doctor. Whether he will suggest Entresto or something else is between patient and doctor. Calls for pulling the ad are extreme as there is zero evidence consumers will panic or quake with fear. When I saw it, I paid attention and looked up the web site, not out of fear but out of interest in my health.

Novartis certainly will have to take seriously the opinions of its prescribers and I am sure is tracking physician attitudes. Drug companies should test disease awareness DTC in advance with both consumers and physicians. No ad should be pulled, however, based on a few negative comments. Impactful ads need to be attention getting. Keep It Pumping succeeds and I would keep pumping it out to consumers.