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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.