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Judging by the first three quarters spending numbers from Nielsen, DTC should continue to grow in 2015 and 2016 versus the strong 2014 showing. Last year was the strongest spending in five years. DTC will probably grow more modestly in 2015 off a much higher base of $4.5 billion in 2014. DTC grew to $3.8 in 2013 from a disastrous $3.5 in 2012.

DTC spending could return to above the $5 billion level in 2016. The golden years were 2006 and 2007 with spending of $5.4 and $5.3 respectively. The financial crisis of 2008 and numerous patent expirations started a steep decline from 2009 through 2012. In fact, in 2012, some critics were predicting that DTC was in a long term decline as a promotional tactic.

What is interesting is to see television remain the dominant medium despite media gurus predicting its demise each year. I recognize the drug industry has an older demographic and that other industries are using television less than in the past. For drugs, however, television continues to take over 60% of the ad budget. There is no reason to think this proportion will change significantly in the next few years.

We know other targeted media are doing well based on other sources. Point of Care is exploding and estimated to be about $500 million, but is not measured by Nielsen. Internet is growing as well but is still a small slice of the pie at about 2% of spending. The world of DTC as media has not changed much over the last decade. Media gurus love to talk about the end of television, but drug marketers are still convinced it is where they should allocate 60-70% of their budget.

In fact we are now seeing television used for drugs that never would have considered it a few years ago. Highly targeted disease states are now using television. Cancer, Hepatitis, and Insomnia for the blind, are just a few now using television. High cost drugs like Opdivo for lung cancer recognize that the payback is there using a broad awareness medium.

With rising DTC spending comes renewed criticism that DTC is causing high consumer prices and over use. Critics were happiest when they though DTC would die a slow death. Now that it is growing again, the spending data will be used as political ammunition. The DTC Industry needs to keep close watch on the calls for a ban, or severe restrictions. The spending numbers show drug makers know using DTC has become critical to create a blockbuster drug. It is nice to see DTC recognized by drug marketers as a must do component of a large drug launch. While DTC may not be appropriate for all branded drugs, it certainly is right for most.

Those of us involved in DTC need a thick skin to deal with constant criticism from politicians, consumerists, physicians, news media, and insurance payers. At least the rising spending makes it easier to take and that uptrend should continue.

Who is Stuart Elliott and why should we care what he thinks? Let me back up a bit. Stuart Elliott was the advertising reporter for the New York Times for over 20 years. He left in 2014 to write for Media Village.com. In a column written on 12/9 Mr. Elliott said he no longer supports DTC. The piece is titled “ Madison Avenue Has Overdosed on Prescription Drug Ads.”

Mr. Elliott says he was a long time supporter of DTC ads. He now thinks they should be reconsidered. He cites the American Medical Association( AMA) call for a ban as a major reason. He also uses the criticism on high drug prices as a reason to end advertising. He thinks ending DTC may help the image of drug companies.

Whenever a long time DTC supporter changes positions it is significant and concerning. As a veteran advertising reporter Mr. Elliott certainly has the experience to weigh in credibly on DTC. I must, however, take issue with his column. Clearly I have my biases toward DTC, as the CEO of a company doing DTC conferences. That bias being revealed I think the facts support the drug industry in not reconsidering use of DTC.

All advertising for profit making companies is designed to increase sales. The fact that DTC does increase sales is apparently the reason critics want it banned. AMA does not like that patients ask for branded drugs potentially increasing use of higher cost drugs over cheaper alternatives. While DTC may lead to patient initiated discussion, I am not apologetic to doctors that patients want to be involved in drug selection. DTC advertising creates inquiries and discussion but doctors have the ultimate power what is prescribed.

Second, there is no basis to think ending DTC will improve the drug industry image. That position seems to based on the faulty assumption that advertising raises prices and takes money away from R&D. The reported $5 billion in DTC spending is really about 3.5 billion in actual spending because drug companies pay less than the reported estimates. That 3.5 billion is just a bit over 1% of drug revenue, not much of a price decrease if it was all used to provide price support . To think cutting all DTC would reduce consumer prices is just not true. If that DTC spending was banned sales would drop by about 10 billion, if we assume a 2 to 1 ROI on current DTC spending. Why would drug companies cut prices if they are losing revenue?

Consumer advocates and politicians complained about drug company pricing prior to DTC. They complained about patent life being too long before DTC. They complained about inadequate clinical studies before DTC. They complained about drug sales forces before DTC. Drug companies have been characterized negatively for decades, long before DTC. Unless drug companies charge generic prices for their branded drugs and never cause a drug related death, there will be critics.

Mr. Elliott says an outright ban might be phased in and maybe we should consider a two year moratorium on DTC ads for new products. Most companies already wait at least a year before they run ads. I am sure considering an extra year is a subject for reasonable discussion between industry and regulators.

What is interesting in this flip flop position is the failure to mention free speech. Mr. Elliott does not discuss why he feels a lawful product should be denied commercial free speech. His rationale that DTC creates image problems and that the AMA is against it, does not address free speech protection. I ask him where he draws the line? Does he think other industries with image problems should stop advertising? There are many advertised products such as cigarettes, alcohol, video games, birth control, and fast food that have numerous critics.

So, Mr. Elliott, while I understand the AMA reasons for being against DTC, I would hope you would investigate whether ending it would actually lower prices or raise the drug industry image. I think the facts are against either of Mr. Elliott’s anti-DTC argument.

The recent announcement by the American Medical Association(AMA) calling for a ban on DTC ads has created a media avalanche of coverage. Google “AMA DTC ban” and you get numerous articles covering the issue. Many are from newspapers with letters/op-eds supporting the ban of DTC. The prestigious New York Timesran an editorial on November 27 titled Turn the Volume Down on Drug Ads. The editorial does not call for an outright ban, recognizing free speech issues might be a barrier. It does say perhaps the public should fund alternate information on effectiveness to offer consumers alternatives to branded drugs. They also float the idea of banning DTC for the first two years of a drug. They end the editorial saying consumers need to be skeptical what they read and hear from drug companies.

The AMA call for a ban coincided with a recently released Kaiser Foundation study saying consumers wanted more DTC restrictions with 89% calling for prior FDA review. This study also received a lot of general media coverage.

Having reviewed the reaction to the AMA call for a ban, I am more nervous about new restrictions on DTC. A full ban is likely unconstitutional on first amendment grounds. The courts do not favor restrictions on commercial speech. That does not mean DTC cannot be further regulated. The FDA has broad authority to oversee promotion of drugs. Could they make advertising more burdensome for drug companies? If the FDA believes DTC is no longer in the public interest they could add more onerous fair balance or risk requirements. They could make it hard to run a DTC ad in 60 seconds forcing longer more expensive ad lengths.

The advertising lobby is of course responding to the threat. Numerous trade organizations take this latest anti-DTC wave seriously. No media company wants to have to replace drug ads which have become a major revenue source. The advertising lobby is telling Congress how many jobs would be lost if drug companies stopped consumer advertising. The New York Timeseditorial board may support restricting DTC but the publisher has to like the ad revenue.

We, as DTC professionals, need to take these threats very seriously. Remember, you as an individual have lots of influence with your member of Congress. I would be reminding them of the benefits of advertising to the consumer. Banning information is impractical in our world of easy access to the Internet. Consumers want to know what drugs are available and DTC helps educate them. Consumers do not need protection from FDA vetted information on DTC ads.

The New York Timesshould have more faith in consumers. Americans are skeptical of drug ads and use them as only one source of drug information. Product information from drug companies, their competitors, insurers, medical writers, consumer watchdogs, bloggers, patients and government researchers is available for both consumers and doctors to evaluate before a drug is prescribed.

As a society, the best protection for consumers is easy access to diverse sources of product information. Banning that information may make the AMA happy, but what else will they want banned next? Would they prefer no ads for alcohol, tobacco, fast food, sugared beverages, processed foods, chips, and other products potentially harmful to our health? Slippery slopes can be dangerous and the advertising industry is aware of the risks of a DTC ban.

The AMA announced through a statement on 11/17 that they just voted to support a ban on DTC advertising. They cited the causes as over-prescribing of more expensive treatments and rising prescription prices. The AMA is being hypocritical since doctors advertise directly to consumers. Insurance companies advertise health coverage to consumers. Labs and test centers advertise. Hospitals advertise. Dentists advertise.

AMA is not calling to ban ads for any of these health care services, just drugs. AMA is essentially saying consumers do not need the information provided in DTC ads because the doctor knows best. Consumers should remain uninformed of new drug options because they may ask for them and force compliant doctors to prescribe something they prefer not to. It seems they think their members have no ability to say no to an inappropriate consumer request.

The AMA wants to control the flow of drug information because it has this outdated notion that consumers are better off knowing less. DTC is advertised information, clearly done to spur drug demand. It is but one source of information for consumers. The savvy consumer knows it is advertising and is skeptical of the claims made. They are information hungry and may use DTC as a starting point to search out reviews of the advertised drug as well as alternatives.

The days of the all knowing doctor who only has patient best interest in mind are over. Doctors are human, sometimes not up to date on drugs, and they are busy. Sometimes they take the easy route and prescribe what they are used to writing. DTC forces doctors to be aware of what is advertised. If they have to answer patient inquiries on DTC advertised drugs then so be it and welcome to the information age.

Today we have competing financial interests in the health care industry. Payers want to pay less for drugs, consumers want the best medications, and doctors get caught in the squeeze between insurers and patients. Government is also involved in trying to reduce cost and would also prefer to keep patients out of the drug selection discussion.

AMA can call for whatever action they like but advertising is free speech. After almost 20 years of seeing DTC broadcast ads, you think they would have by now learned to deal with patients asking about drug brands. DTC will not be banned and AMA would help consumers more by doing studies on how doctor and patient can more effectively select and properly take drugs. Calling for a ban is easy to do but not very helpful for consumers. Hilary and Bernie will applaud, and use the AMA call for a ban as support for their anti-drug company rhetoric.

While DTC will not realistically face an outright ban, drug companies, advertising agencies, and media sellers need to be aware that there is a lot that can happen short of a ban. FDA can make advertising execution more onerous through more stringent risk and fair balance requirements, and Congress can use tax policy to restrict advertising deductibility. Everyone in the DTC space should be politically active, contact their Congressmen to oppose DTC restrictions, and understand Hilary is dead serious in her dislike for drug companies. There is very little political downside bashing drug companies so expect them to be a featured villain in the 2016 election soap opera.

I don’t mean to sound paranoid but it seems to me that media reporting on DTC is heavily biased negatively. Maybe it reflects the media’s general anti-big business attitude. I recently came across a Los Angeles Times article on DTC, focused on risk communication. It is titled “Direct-to-consumer marketing is a scandal, can the FDA fix it?” The article from 9/18/15 is about how drug ads confuse consumers with medical language and overstate benefits through its pretty visual scenes.

The FDA has actively regulated DTC since its inception and continues to oversee what the ads say. They ensure fair balance and as any drug marketer knows, FDA reviewers are not rubber stamps for drug makers. This article is not very different from most critiques of DTC. The writer calls for more easily understood consumer language. Most drug companies are already doing that in broadcast and print. No drug maker is trying to obscure risks through some hidden plot to use medical terms.

My concern on how the media writes about DTC is when they use terms like scandal in the headline. This article never said what the scandal really is about. The writer presented no quantitative evidence of consumers being deceived by drug ads except citing studies that consumers do not fully understand side effects in ads. Scandal is a strong word that should be used judiciously. While it is certainly true drug ads are meant to sell products, these ads are rigorously reviewed by FDA for accuracy. Ads are not meant to be the only information on a drug the consumer sees. The consumer has easy access to many views on a drug’s efficacy and risk profile.

Consumers may not fully understand every warning or risk in an ad. They can look up more on the Internet and ask their doctor. This reporter makes DTC ads out to be some nefarious strategy to obscure risk. Yet what other advertising category is regulated such that half their ad contains warning and risk information. I admit there are legitimate concerns that DTC ads can be confusing. Drug makers and FDA want consumers to understand the ads. Most print ads now use a consumer friendly fact box style of risk information. Television ads are regulated to ensure risk communication is read at the same pace as benefits. FDA has done and is doing numerous studies to ensure ads are understood and in balance.

While scandal as a headline gets attention, the media needs to back it up with proof. Certainly the Los Angeles Times is happy to accept drug ads as a revenue source. Maybe they should refuse such “scandalous” ads in an effort to protect their readers. Somehow I doubt they would because DTC ads help their bottom line.

Bob Ehrlich, Chairman
DTC Perspectives, Inc.

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.