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The Kaiser Family Foundation recently asked consumers about DTC advertising and drug affordability in a recent poll. There is some good news and bad news for drug advertisers in the poll. The good news is a 51% majority of Americans say DTC advertising is a good thing. While that is not an overwhelming mandate in support of DTC, it is not a bad number.

The concerning poll data was that 89% want drug ads to be approved by FDA before they air. The public has this false perception that drug ads are not well regulated by FDA. While FDA does not by statute pre-clear ads, almost all drug companies voluntarily submit ads before they air to get FDA comments. The drug companies must submit ads to FDA once they air but few will wait that long. No drug company wants to risk a punitive action by airing a violative ad because they face running corrective ads. The public can rest assured that FDA for all practical purposes does pre-review ads.

What is also concerning is that 57% say drug companies spend too much on advertising to consumers. They probably believe that drug companies raise prices to fund ads. As I have written before drug ad spending is only about 2% of revenue. Ending DTC would not cause drug companies to cut prices. In fact by lowering demand, a cut in advertising would probably cause drug companies to raise prices to increase revenue. This idea that drug ads raise prices is continually fueled by ignorant politicians who conveniently rail against drug marketing.

Since Americans think drug prices are too high anything that can cast marketing as the cause is a political winner. The poll said 63% of Americans want government action to lower drug prices. Of course we all want lower drug prices. That would be nice as would lower prices for a lot of things. Most Americans also want cures for disease and to be protected against future pandemics. While explaining the link between drug research and drug prices is complex, I am sure we as an industry could do a better job making the case.

While the poll found nothing shocking, the views of Americans on drug pricing and advertising guarantee it is a juicy election issue. That will keep drug company and advertising industry lobbyists busy fighting against threats of price controls and marketing bans. The drug industry does not deserve to be vilified but I am afraid that will be the case for a long time. All we can do is try to present the facts fairly.

Yes, DTC is 30 years old, not 18 as some say, thinking it started in 1997 after FDA liberalized television regulations. The FDA started to allow it in 1985 after lifting the moratorium on doing prescription drug ads. DTC spending was at a trickle in the late 1980’s and started to take off with a print boom in the early 1990’s.

In 1991 spending was only $55 million but steadily grew through 1996 to $595 million. Most was in print but some branded television reminder ads also started to appear. The FDA recognized the folly of allowing drug companies to state the brand name on television without allowing the indication. Consumers saw television ads screaming Claritin, Claritin, Claritin without mentioning what it was intended to treat. Drug companies used print to tell what it was for, and TV reminders became the Hamburger Helper of brand name awareness to supplement the full story told in print.

In 1997, FDA issued a guidance allowing drug companies to do branded with indication television without being forced to scroll the whole package insert. This led to the feasibility of the 60 second ad we know and love today. The spending floodgates opened rising steadily each year to reach over $5 billion in 2006.

Then the spending started declining steadily to the mid $3 billion level by 2013 largely due to big brands going off patent and a slow down of new drug launches. Some industry experts felt DTC could be on the outs. Some drug company executives spoke out against it saying it has caused image issues, and DTC was threatened with moratoriums, tax penalties, mandatory pre-clearance. For the past three years we have seen a strong rebound driven by many new brands heavily using DTC. We could see $5 billion again very soon.

So why does a 30 year old industry still feel so unsettled? What still needs to be learned? Are we now all experts or still relative novices? DTC, unfortunately, will always be unsettled. This is because many influential people in government, medicine, consumer watchdog groups, the media and insurance dislike it. The arguments are many and we all know them. DTC overstates benefits, it raises prices, takes money from R&D, causes doctors to waste time explaining drugs seen on ads, and creates demand for over treatment.

Given the drug companies are on the presumptive Democratic nominee’s enemies list, DTC will be unsettled for the foreseeable future. Thirty years of advertising has not mellowed the critics. Threats to DTC will remain a fact of life from outright bans, moratoriums on new drug advertising, forced reporting of ad expenditures versus research, taxes on advertising, restrictive FDA policy, public pressure and a media quick to vilify drug companies.

Is there now a marketing maturity through accepted principles and understanding how best to do DTC advertising? I would say we have a come along way since the early 1990’s but still have a ways to go to reach maturity. Health care is such a dynamic industry and changing in consumer behavior and technology faster than we can absorb. We all know how social media exploded while FDA was puzzled how to regulate 2015 media with 1970’s regulations. We have gotten great experience making television and print ads, are getting good at point of care media, and have volumes of good ROI data. Our DTC marketers are no longer pulled from the detail forces of drug companies, and most have solid consumer advertising backgrounds.

The next five years will create massive opportunities for DTC marketers. We have the multicultural explosion still barely recognized in DTC advertising. We have Internet spending lagging other industries but has become the main source of health information. We have consumers much more involved in how to spend their increasingly higher health care co-pays. We have a government adding millions of people to health care insurance. We have a shortage of doctors to see patients, getting less time with each patient meaning they need more help explaining treatment options to patients.

We also have a technology explosion in health records, health trackers, and other fitness wearables. We are seeing the start of remote medicine, allowing diagnosis and treatment online. We see an explosion of retail medicine through mini-clinics. We can get vaccines at our supermarkets. The consumer expects medicine to be convenient and reasonably priced.

DTC will be a part of all these trends and although television will still be a big part of most media plans, new approaches will be evaluated, tested and added to DTC media. At thirty, we can say we are entering the prime of the DTC era and our experts will need to stay busy making sense of the many forces shaping consumer advertising.

A few years ago some in our industry, the media, and in medicine were predicting the death of DTC. Instead it has resumed a strong growth trend and we have escaped a premature death. DTC works well and drug makers recognize it. There is no reason to think DTC will not celebrate 40, 50, and beyond. I am at 20 years in DTC and look forward to many more.

Recently Opdivo from Bristol-Myers started television advertising for its advanced stage lung cancer indication. What Opdivo does is work with the immune system to help fight the lung cancer. Clinical studies show survival versus chemo of 9.2 months vs. 6 months among half the patients taking it.

The ad, which is on the Opdivo web site, says “it’s not every day something this big comes along.” This voiceover is followed by an image on a skyscraper saying “a chance to live longer.” The ad continues with supers imposed on other buildings on living longer.

The cost of Opdivo is quite high at over $100k a year. The survival benefit is clinically significant. Survival, however, is measured in months not years. The ad tells the survival benefit with a super. So we have a drug with a significant benefit and a very high cost to the insurer. While the patient and their families certainly want the extra months of survival, the insurance companies are going to be reluctant to pay that much for those few extra months.

The ad will be highly effective in getting patients to ask their doctor about Opdivo. Insurance companies and government critics will surely hate this ad because it increases demand and it costs the payers a lot. I can hear Bernie and Hilary shriek with indignation that patients are given hope by the ad, only to be turned down by insurers over the high cost.

The use of biologics is growing and many genomic cures are on the horizon. The recently launched Hep C drugs Solvadi and Harvoni cure this terrible life threatening disease. They cost about $80k for a course of therapy and have created the same angst among payers. Both drugs used DTC effectively in raising consumer awareness.

The use of DTC for drugs costing tens of thousands a year is rising. The backlash over price will make DTC for these drugs a target for legislative and payer critics. Drug companies need to be ready for the outrage. Consumers really do not know from drug ads what the cost will be for a new treatment. Advertised drugs have widely varied costs per pill or dose from a few dollars a pill for cholesterol drugs to a thousand a pill for Hep C. The commercials do not address price and consumers face potential sticker shock.

Most consumers have an idea what that new car, new TV, or new box of detergent will cost. Drugs are somewhat unique in that pricing is opaque. Watching the Opdivo ad gives no clue the drug is 100 times more costly than a cholesterol drug. Drug companies have price supports through compassionate use programs for the poor, but those are not used broadly. Insurers hate these DTC ads because it puts pressure on them from consumers to cover life extending drugs. Once consumers complain, legislators enter to cajole insurers to cover the drug.

Opdivo and other cancer drugs have every right to advertise. What they offer is life altering. They should, however, expect legislative and consumer pushback over advertising a benefit that is expensive. While many patients will get the drug covered, many will not. The lack of consumer price information is an important strategic issue in my opinion and unique within the drug industry. The industry needs to be better prepared to defend premium pricing and explain to consumers why some drugs cost thousands a month. DTC for those drugs will motivate price critics to scream for price controls and DTC bans.

With rising DTC expenditures it is clear all media segments have new opportunities for a piece of a larger pie. I have always been media agnostic in my job as advisor, publisher, conference organizer and writer of DTC columns. I know all media has its place in the marketing plan. Traditional media such as television, magazines, radio, and newspapers are still critical to drug advertising success.

One area, though, seems to be on the verge of exploding in use and should fuel growth in DTC spending. That area is reaching the consumer through their physician’s office, pharmacy, clinic, hospital, or remotely through smart phones or customized health tracking devices.

Most consumers think most about their drug when it is being prescribed, filled, or first used. Engaging patients through education at all of these points is critical for success. Engagement is changing beyond just awareness advertising at these points. While awareness advertising in physician offices or pharmacies is critical, new technologies are allowing more more robust interactions between physician, pharmacist and patient.

Drug companies are working to understand how technology can be used to help doctors and pharmacists educate patients. Of course drug companies are most interested in those professionals writing more of their drug. The two biggest technologies that will affect drug company marketing are electronic health records (EHR) and mobile device health apps.

While EHR is being rapidly expanded and not yet widely used as an advertising medium, over time drug companies will see major opportunities to partner with EHR companies. Doctors want to provide clear, concise benefit and risk information to their patients. Piggybacking on the EHR system with good drug information will be key in the future. Doctors will be using push newsletters, emails, texts, robo-calls more in the future. Drug companies will be involved in underwriting these efforts especially as it relates to persistency.

Mobile consultation and diagnosis through wearable trackers will be common place in the near future. People with diabetes, high blood pressure, heart conditions, and other illnesses can be monitored real time by their health providers. Imagine the possibilities for drug company partnerships in helping doctors monitor patients. Ensuring proper adherence to a prescribed medication is good for the provider, patient, and drug maker.

There is still enormous potential for growth in awareness advertising at traditional point of care locations. More offices are joining these networks and more exam and waiting rooms are being added. I expect more consolidation between media suppliers so they have a broader reach. Drug marketers and their agencies want the ability to reach desired specialties without dealing with fragmented buying. The growth of retail medicine through mini clinics is also offering new locations for patient education media.

From what I hear from the media companies in the point of care space sales are doing very well. What these media companies need to do is make it easier for drug marketers to buy in scale, track ROI, and learn how to work in concert with the providers to engage patients beyond awareness advertising.

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.

Jublia, from Valeant for toenail fungus, has made heavy use of the celebrity route in its advertising. First, they used tennis legend John McEnroe and now are adding talk show host Mario Lopez to the mix. Most of us remember Mario as Slater on Saved by the Bell.The Jublia ads are light in tone and I equate the ads to what an OTC drug might do. After all, toenail fungus is not cancer, so the ads can use a lighter approach.

I have mixed feelings about humor in health ads. While toenail fungus is not prostate cancer (Valeant also makes prostate cancer drug Provenge), it is not funny to those who have it. The thickening and yellowing of a toenail can be embarrassing and physically uncomfortable. When I was marketing antacids in the 1980’s, many ads tried humor. What patients said to us was there is nothing funny about acid reflux and burning the esophagus. So we proceeded with caution on our ads regarding making light of a painful condition.

My reservations about humor aside, the Jublia campaign is very good. The ads are memorable and get their message across clearly. They are in your face ads type ads, shouting their benefit out through the little animated toe icon and the celebrity presenter. Sometimes ads bordering on obnoxious are highly effective. Mr. Whipple from the please don’t squeeze the Charmins ads was a much hated character but the ad worked.

Jublia needs to compete against the many anti-fungal OTC’s. Therefore as an Rx they need to get consumers comfortable switching to an Rx alternative. That means dealing with consumer concerns about safety. While Jublia has few side effects as it is a topical versus a pill, consumers need to feel it is both effective and safe before they request it. The lighter tone does aid in making consumers feel the product is not something to fear.

I assume the celebrity campaign will continue and more will be added beyond McEnroe and Lopez. The drug has sales of about $450 million so there is plenty of profit to be invested in advertising. Jublia marketers have done an excellent job navigating that difficult area of being an Rx in an OTC dominated world of toenail fungus.

Outdoing Bernie is hard to do but Hillary seems to be more anti-drug company than the avowed socialist candidate. Hillary is tired of high drug prices. Here is someone that charges a public university $225,000 for a canned speech and is outraged at high prices from drug companies. Never let hypocrisy affect a good political talking point.

Hillary has a tax proposal that will kill DTC. She wants to make drug marketing a non-tax deductible business expense. That has been proposed before and successfully defeated. The advertising lobby knows that deciding to make drug advertising non-deductible is a slippery slope. Does the government then make advertising fast foods non-deductible because it harms public health? What about violent video game advertising? Beer? Having the government decide what can be advertised is dangerous. Proposing tax policy to discourage advertising certainly gets all the media company lobbyists nervous.

Hillary also wants to allow Medicare to negotiate drug prices, an oft-mentioned proposal by many on the left. She also wants to limit to $250 a month what consumers pay for drugs for chronic conditions. By doing this she thinks drug companies will be forced to lower prices.

Hillary knows when to time her outrage. The drug industry has increased prices more than inflation recently. Much of this is because they invented and marketed some high price cures for Hep C. There has also been a lot of negative publicity recently about a drug that went from $13.50 a pill to $750 a pill for reasons not well explained by the small drug company who recently bought the drug. Sometimes the critics have a fair point and the drug industry must be reasonable on pricing. This company responded to the harsh criticism and announced it would go back to the $13.50 soon.

Democrats like to use government power to limit prices. They usually have no business sense in proposing these price actions. They think if they mandate lower prices, that there will be no negative impact on innovation or supply. These proposals are quite naïve about how business works. That is likely because many key Democrats have no business background. Hillary thinks drug companies have these bags of ill gotten cash sitting in vaults. If she mandates they charge less, then these drug barons will just act as if nothing has changed. The drug companies, in her view, will still make enough to behave the same in terms of drug development. After all how many bags of cash do they need?

Drug companies are the greedy enemies of society, according to Hillary and Bernie because they charge more than decent people should pay. The left would like to decide what profits are acceptable for many industries they find are greedy. Oil companies and banks are also frequent targets. Free markets do a good job of deciding a fair price. Government is just not very good as a market referee.

Price controls just do not work. You reduce price and you get less re-invested on new products. In Bernieland the noble government scientist invents cures and gives them away for cost. In Hillaryland, the paternal government tells industry what a fair profit should be. I agree drugs should be affordable, but cost of research does matter. Drug companies are entitled to make good money. Hillary and Bill and are free to charge a market rate for a canned speech. If Hillary could only get $5000 a speech would she do as many?

Free markets can be messy but they ensure that those with needed products have incentives to keep making them. It is silly to think the laws of economics will be changed by government mandates. Cap drug prices and see how many breakthrough new products are developed. That expensive cure for Hep C would never have been invented. It will be politically popular to stick it to drug companies but incredibly stupid. That next pandemic that will inevitably occur will not be cured by Bernie or Hillary. It will be those “evil” drug barons who do it, but only if they have those bags of cash available to invest.

Bernie Sanders, the fast rising socialist/populist candidate for President, does not particularly like drug companies. He thinks they make outrageous profits and is for introducing legislation to cap prices. He will propose Medicare negotiate prices, something prohibited under the prescription drug act. He will also require disclosure of costs of developing drugs, and require transparency on what the drug costs in other countries. Finally his bill would permit importation of drugs from Canada.

These proposals have been made before, many times over. The same argument continues to be made that drug companies sell drugs for more in the U.S. than other developed countries. The typical Democrat response is to propose price controls and cite outrageous prices knowing the issue is political red meat to their constituents.

Do drug companies make outrageous profits? I compared the net profits at drug companies to other industries based on data summarized by the NYU Stern School of Business. Drug companies make about 16% net margin. That is a healthy profit but not that different from soft drinks at 13%, entertainment 13%, computers 14%, banks 19%, railroads 18%. Good profits yes, outrageous no. Career politicians who have no business knowledge consistently fail to understand that drug prices cannot be interpreted in a vacuum without looking at costs. Costs are more than the marginal production cost of stamping out a pill.

The argument that Medicare should negotiate better prices based on foreign price comparisons is in effect government price controls. Price controls in other countries do mean lower prices for the Europeans and Canadians. If price controls were instituted here profits would decline, and research would be geared to me-too drugs. Senator Sanders, a proud socialist, is not concerned with the cost of drug development and thinks he knows the acceptable level of profits for drug companies.

The importation of drugs from Canada will cause drug companies to quickly limit what is supplied to Canada. Drug companies will supply their higher priced markets first and will not allow re-importation to destroy their U.S. pricing. In the short run Canadian consumers will not be able to get their drugs because of increased demand here for cheaper Canadian drugs.

While it sounds easy to make prices lower here through government edict, one must be aware of unintended consequences. Bernie Sanders will get lots of applause talking about greedy corporations, but he is being naïve if he thinks he can have new drug innovation with price controls. We will end up with companies focused on high return R&D for minor me-too improvements only in large disease categories.

We need drug companies to take big risks to find cures for the next Ebola, bird flu, or resistant bacteria. While we like to think there is always a brilliant government scientist ready to find a cure but the reality is different. It is private sector drug research that finds our cures and that is expensive. High risk research deserves high rewards, even outrageous rewards Senator Sanders.

There are no doubt some very expensive prescription drugs that have industry critics upset. Gilead has launched a hep C cure with pills costing one thousand dollars a pill for a three month daily treatment. Some cancer drugs cost $100,000 or more that extend life by a few months.

Critics are pushing for government action to dig into why these drugs are so expensive. The drug industry says these prices reflect the high cost of development, including the many drugs that fail to make it past the clinical phase. The cost to get to a successful FDA approved drug can cost billions. Critics say consumers should be able to see the costs of development and marketing.

Several states have introduced legislation to require such disclosure. The idea is to make public the real cost of development and marketing. I assume the goal here is to outrage the public if those costs are low and the price to the public is high.

The issues on pricing are complex. Drug companies need to make lots of money on their success to fund the much higher number that fail. The public needs to be able to have access to these expensive drugs. Insurance companies feel enormous pressure to cover these expensive drugs. The solution may be to better understand the development costs of the high priced drugs. Obviously the drug maker wants to charge the highest price it can and optimize its profits. Is there such thing as a fair profit margin? Should drug companies be told what that level should be?

One has to think that Gilead spent years finding a cure for the horrible disease that is Hep C. They should be greatly rewarded for that breakthrough. We want drug companies to look for quantum leaps in treatments and society needs to reward such innovation. Critics say that me-too branded drugs waste R&D resources. So when a drug company goes for breakthrough drugs, these same critics say the price is unfair.

I do not know what is a fair price for a cancer, HIV, or hep C drug. Is it what the market will bear or some government formula for what they think is a fair return? Other countries use the latter approach. The question is without a market like the U.S. with free market pricing, will those drugs ever be developed?

This is the age old question of why Americans are subsidizing drug development for other markets. The drug industry does need to justify its prices but not through legislation on its cost structure. The insurance companies and drug competitors are the best chances of keeping prices lower. Insurers will evaluate the cost of the drug versus other treatments or versus the cost of non-treatment hospitalizations. A drug that commands a high price provides incentives to competitors to enter. Over time that $1000 a pill will drop to $100.

Do we want to allow drug companies to hit home runs with breakthrough drugs? I think the public wants them working on R&D programs to stop pandemics and cure cancer. While a thousand per pill may seem obscene, what is more obscene is not giving drug companies the financial incentive to succeed on their high risk research programs.

I kid you not. Kim Kardashian is the subject of an FDA warning letter to a drug company. OMG, and LOL! WTF! Kim decided to post on Instagram how great this morning sickness pill worked. It is called Diclegis from Duchesnay. Kim is paid to promote the drug but is not quite up to speed on fair balance requirements.

Kim, inexplicably to this old writer, has over 42 million followers. I am embarrassed to say I can name all the Kardashians and watched the first episode of Cait. So their spell has power over all of us.

The FDA does not like a celebrity paid by the drug company touting a brand’s benefits without discussing risks and side effects. Kim neglected to mention those in her glowing post and thus FDA, who is likely filled with Kardashian fans, caught wind of it. In what must be their most bizarre warning letter, they told the powers at Duchesnay that even Kim must have boundaries. Americans depend on Kim for advice on many matters. A person with such gravitas is expected to tell American women all the risks and side effects when she discuses a morning sickness pill.

So Kim may be expected to do a corrective post. She most likely will have to hold the risks page up for a selfie. Kanye may have to write a rap song with the most common side effects. Who knows what FDA will require to undo the damage Kim has done.

This is not the first celebrity to violate fair balance rules. It might be the first doing it on Twitter and Instagram. What it should teach drug companies is that celebrities may not be the easiest folks to train to stick to FDA regulations. Paying Kim to promote a drug has more risks than paying her to appear at a night club.

Of course the irony here is that FDA, by making a stink out of this, has had Kim’s errant post appear in every news feed this week from every major media outlet. I was interviewed by the Washington Post yesterday on this subject. I am not saying the warning letter was wrong, just that when it involves a Kardashian it gets airtime. So the drug maker gets massive publicity on the brand. I never heard of the drug until I saw the story.

FDA should recognize that social media is very hard to regulate. Their glacial response to the existence of new media has created a problem. While they should expect consumers to receive fair balance they cannot really demand the same level of detail as in print. If they overly restrict communication they prevent consumers from getting good information. I know they will try to be restrictive but they need to adapt their regulations to new realities.

Yes, Kim messed up and so did the drug company. But let’s be candid here. If Kim had added all the fair balance as required would it make any difference to her audience? Would they read past her first line? Maybe in these type of social media promos FDA should require a one line catchall warning that says all drugs have side effects and risks and a link can take the reader to those. That might get more attention than a litany of risks no one would read.