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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.