DTC Advertising Under Pressure

Direct to consumer advertising is a double-edged sword for pharma manufacturers: It boosts sales of their products, but it also leaves them vulnerable to negative public perception. In the eight years since the FDA first permitted DTC for durgs, the noted benefits have largely outweighed the potential for damage. But several factors are combining to shift the equation and now even proponents are clamoring for change. IN VIVO interviews industry experts to get their opinion of the current status and future direction of DTC.

Under political and public pressure, drug marketers are evaluating the messages they convey in DTC advertising. Marketing and legal experts interviewed by IN VIVO give their opinions about what needs to change.

By Wendy Diller

Direct-to-consumer (DTC) advertising is a double-edged sword for pharma manufacturers: It boosts sales of their products, but it also leaves them vulnerable to negative public perception. In the eight years since the FDA first permitted DTC for drugs, the noted benefits have largely outweighed the potential for damage.

Pharma companies certainly seem to favor DTC—their spending on the medium climbed to $4 billion a year in 2004, up from about $3.2 billion in 2003 and $2.6 billion in 2002, of which 80% goes to television, according to IMS Health Inc. (These numbers are actually about 40% less because of widespread discounting, according to Bob Ehrlich, president of DTC Perspectives Inc., a newsletter and publishing company.) DTC has helped to boost sales of brands in crowded categories like antihistamines, cholesterol-lowering drugs and lifestyle drugs (erectile dysfunction, birth control).

But DTC may be too successful for its own good. While critics have persisted since DTC's inception, several factors combined in the past year to make even proponents reconsider current DTC trends. Merck & Co. Inc. 's withdrawal of its painkiller rofecoxib (Vioxx) from the market last fall due to safety concerns; the Medicare Modernization Act, which is certain to make the government more cost-conscious now that it will foot the bill for pharmacy benefits for seniors, and overall rising pharmaceutical costs that rankle payers and politicians cast a pall on DTC advertising. The Vioxx incident, in particular, ignited critics who argued that DTC played a role in encouraging over-prescribing of the painkiller. (See "Message Problems: One Key Lesson from the Cox-2 Advisory Panel," IN VIVO, March 2005 (Also see "Message Problems: One Key Lesson from the Cox-2 Advisory Panel" - In Vivo, 1 Mar, 2005.).) Everyone involved with DTC—the pharma companies, their ad agencies, regulators and the public--agrees that it has to change, but they can't agree on how much and in what ways.

Recent remarks by Lester Crawford, the acting FDA commissioner, who has been nominated for the post of commissioner, crystallized the negative undercurrent. The March 28th issue of the Pink Sheet noted that he was so upset about ads that ran during the college basketball playoffs the previous weekend he formed a working group to recommend steps to address "egregious" DTC. "I watched a lot of television this weekend because the basketball games were on," he said, "and it was a primer on the fact that DTC advertising is a little bit out of hand, particularly on certain drugs that provide the opportunity for titillation." He was likely referring to advertisers of erectile dysfunction (ED) drugs, which ran ads during the games.

The remarks raised eyebrows—some Washington lawyers say the newsletter misquoted him, although the FDA wouldn't comment on that. (Crawford seems to have climbed down off these remarks, even if they were accurate; at the Bio-Windhover 2005 conference in Washington in April, he noted the upside potential for DTC advertising and offered personal anecdotes about its benefits.)

But his message and those of other FDA staff members in speeches to industry clearly indicate that the agency is concerned about the direction of DTC advertising. Thomas Abrams, director of the FDA's division of drug advertising, marketing and communications (DDMAC), which reviews all DTC advertising and other pharma promotional materials, has also noted in speeches to the industry that he is concerned about the tenor of current DTC TV ads, which sometimes veer too far from information conveyed on the drug label.

Recently, companies received FDA missives about drugs as diverse as Pfizer Inc. 's allergy medication cetirizine hcl (Zyrtec), AstraZeneca PLC 's rosuvastatin calcium (Crestor) & ED drug vardenafil (Levitra), which is marketed by GlaxoSmithKline PLC and Schering-Plough Corp. on behalf of Bayer AG [See Deal]; the ED field in particular has become a lightening rod for critics: The Levitra ads went so far as to omit information as basic as the drug's indication and major side effects, according to the FDA letter. In the Zyrtec and Crestor letters, the FDA excoriated the manufacturers for ads that made unsubstantiated superiority claims against competitors.

A More Sober Industry

Still, much of the concern is just talk—the agency hasn't changed its basic rules regarding DTC and has no plans—and little authority--to do so. It is sending out more warning letters than it did a few years ago—12 in 2004, up from four or five in preceding years—but the increase reflects ads that ran months before the Vioxx withdrawal last September because the letters take time to wind their way through the bureaucracy before they get sent out. It still has the same level of 40 staffers at DDMAC, which reviews pharma advertising—and no plans to hire more people.

Its standards remain intact: ads must present fair and balanced information about the risks and benefits of a drug in line with their approval label. This leaves room for plenty of subjective interpretation, which critics say sometimes leads to inconsistency in agency decisions. The FDA can issue guidances to clarify vague regulations but these have complications too. They take the agency months, even years to draw up, often raise more questions than they answer, and arouse new kinds of criticism.

Two draft guidances now pending FDA action for more than a year could be helpful in making sure that ads educate consumers. One seeks to make the "brief summary," required with all pharma ads, more user friendly. Brief summaries now disclose every risk associated with a drug and on the drug label; the proposed guidance encourages disclosure only of major risks. The agency's point: no one reads the full disclosures so they are of little value to consumers. So far, companies aren't adopting this approach, largely because they're afraid of liability issues, industry experts say.

A second draft guidance encourages companies to develop "disease education" and "help-seeking" ads, which focus on educating consumers about health conditions rather than specific products. This seems to have more traction in the market—several companies are preparing disease education campaigns.

Beyond guidances, the FDA can't do much. Congress would have to amend the Food, Drug & Cosmetic Act (FDC) in order to enable the FDA to make major changes to its DTC policies, something Washington insiders say it isn't likely to do despite political bluster. "Congress can't do much about DTC even if it desires to because it doesn't have a legislative vehicle onto which they can tack DTC legislation," says Ira Loss, a senior health care policy analyst for Washington Analysis Corp. The FDC prohibits the agency from changing its advertising regulations without a formal on-the-record rule-making before an administrative law judge that is costly and hardly ever done, says Daniel Troy, who recently left his post as the agency's chief counsel to join Sidley Austin Brown & Wood. Loss notes that one such vehicle is user-fees, which comes up for legislative renewal in 2007. But by then Congress is much more likely to be focusing on biogenerics, he predicts.

The FDA meanwhile could place more restraints on consumer advertising of prescription drugs, but its authority is limited, Loss notes. Subversive means, however, are available, such as extracting a temporary moratorium on DTC advertising of a new drug as part of the drug review process.

For now, the FDA sends out letters, which have little enforcement power. "About all they can do is to hit hard with a wet noodle," Loss argues. Companies respond to the letters by agreeing not to communicate a particular message but that doesn't mean people don't remember the original ad. "The FDA is left to close the door after the horse is out of the barn."

Nevertheless, DTC critics are gaining traction because these ads touch on two recent hot issues—safety and overuse of prescription drugs and pricing. Indeed, what's new in the DTC debate, which has been ongoing since Congress legalized the medium in 1997, is the serious attention being paid to safety arguments. Vioxx brought safety issues to a head; DTC critics argued that Merck's liberal use of TV ads for its blockbuster drug encouraged its use by inappropriate patient populations. Drug safety is a much stronger platform for FDA critics than nuances in effectiveness, notes Arthur Levine, a Washington DC-based partner at Arnold and Porter.

Ultimately, the pharma industry may address these tensions by self-policing. Whether because of public and political pressure or concern about rising DTC spending, companies seem more interested in "appropriate" or sober advertising. Most notably, several top pharma executives, including Pfizer's chairman and CEO Hank McKinnell, Jean-Pierre Garnier, CEO of GlaxoSmithKline, and Johnson & Johnson 's CFO William Weldon joined the chorus of critics. Weldon, in a widely publicized speech this winter, told members of the Pharmaceutical Research and Manufacturers' Association (PhRMA) that current "DTC advertising…may inadvertently minimize the importance and power of medicines…and their risks." He then promptly unveiled the draft of an ad for the birth-control pill norelgestromin/ethinyl estradiol (Ortho Evra), which spends a significant amount of airtime mentioning risks associated with use of birth control pills. At the company's April presentation to analysts Pfizer executives said the company's promotions will feature more non-branded ads in response to concerns from both the public and regulators. (See "Pfizer's Analyst Day: And Now, For Its Next Trick," IN VIVO, April 2005 (Also see "Pfizer's Analyst Day: And Now, For Its Next Trick" - In Vivo, 1 Apr, 2005.).)

In addition to J&J, Pfizer and others are planning to introduce ads that present messages based more on fact and less on entertainment or imagery. These ads may be as effective as traditional DTC—or moreso if they boost pharma companies' credibility. On the other hand, they could be too dull to capture peoples' attention.

In light of these changing perceptions of DTC, IN VIVO asked several key industry experts to comment on the current status and potential future direction of DTC. Pharma companies who are at the forefront of these changes were reluctant to talk about their advertising strategies for competitive reasons.

Wayne Pine

Wayne Pine is president, regulatory services & healthcare, APCO Worldwide.

DTC will be increasingly a focal point for a lot of issues. The political tide is against DTC in the medical community and on Capital Hill as the new Medicare Modernization Act reimbursement schedule goes into effect next year, making the government the largest purchaser of drugs. Washington believes that marketing abuses are taking place in the pharma industry. Thus, the pharma industry must pay attention not only to drug safety but also to drug promotion. The tide is turning and so the industry needs to voluntarily reconsider how it approaches DTC.

That said, the FDA has consistently supported DTC and TV advertising. It hasn't changed its rules in this area, nor does it plan to. (Lester) Crawford and (Tom) Abrams are expressing concern and there is modest pick up in enforcement, but it's not dramatic.

Stuart Klein

Stu Klein is president of Quantum, a part of CommonHealth.

I'm a huge proponent of TV advertising because our research shows that between 70% and 80% of people become aware of a brand from TV. When we ran a heavy print-only advertising campaign, awareness never got higher than the mid-20% range.

Change will be informal, not formal. As a result, DTC and professional advertising teams will have to work more closely together. Too often, the sales and DTC messages for a drug aren't related, or the relationship is very superficial, oriented around logo, color, characters, but not well-leveraged. We need to make DTC work harder for physicians. For example, a story for professionals may tell about mechanism of action, but DTC rarely covers that in an integrated way. One opportunity is for DTC to provide a deeper message about mechanism of action and for doctors to fill in the rest of the story.

Integrating these activities isn't easy. Part of the problem is the way companies and their ad agencies work together. Companies tend to hire different agencies to handle DTC and professional promotion, in part because each agency has different areas of expertise. Finding companies that do both well for one product is difficult. Typically now, DTC and ad agencies get together only periodically with professional and brand managers. But for big products especially, the two sides have a tough time, even internally within a company, getting on the same page, let alone externally with two agencies.

Companies need to work with DTC agencies that understand the professional message and visa versa. During the agency selection process, companies need to be aware of and get a better understanding of how well each agency can work with the other. Internally, companies need to force greater synergies. For example, right now, companies often do research on DTC ads before they are made. They ask doctors to look at ads and as long as doctors don't object forcefully, the ads go forward. The companies, however, need to ask more probing questions to get doctors to comment on how to make DTC work better for them.

I have one suggestion for helping to achieve fair balance in DTC: the FDA has trouble determining what ads are truly communicating. All companies test advertising before putting it on the air and one thing I advocate is using our research to help the FDA understand what our ads are truly saying. Then, if the FDA has an issue with an aspect of an ad, a company could show it this research. For example, the FDA may think an ad overstates the benefits of a drug, but the creative research might show otherwise.

Bob Ehrlich

Bob Ehrlich is founder of DTC Perspectives Inc., a publishing and conference company specializing in DTC.

Companies pour $4.4 billion into DTC advertising, but that's an inflated number because they don't pay list price for ads—the real figure is about 60% of that.

The FDA is sending out more and tougher warning letters faster than it did a year ago. It has clearly stated that it believes that DTC has gotten more over-the-counter (OTC) in its messages and imagery in the last three to four years. This is hard to explain, but when you see these ads, you know it. FDA staffers noted at a conference we held earlier this year that most people don't sail or ride horses at age 65. This isn't typical and shouldn't be part of a drug ad's imagery.

I predict this pressure will lead to several tiers of advertising. Antihistamines and cholesterol-lowering drugs, which are very safe, will be treated differently than cancer drugs and other drugs with serious side-effect profiles. Certain categories with moderate side effects, like erectile dysfunction and antibiotics, will fall in between. The FDA is also talking about a moratorium on advertising of new drugs for a year post-launch. This would become part of the ongoing negotiations between FDA staffers and the agency during the regulatory review process. If this comes to pass, it will be problematic for companies trying to break into categories with existing competition because they will experience a slower build for their drug.

The FDA has put out brief summary draft guidance, but no one has responded to it. Companies are reluctant to apply the new, abbreviated format because they feel running a full page of risks gives them more liability protection. In my talks I always note that juries aren't likely to rule in the drug company's favor if the ad is incomprehensible.

The FDA is beginning to compile draft guidance on how to best convey risk information. The most common violation is inadequate presentation of risk information. The risk guidance differs from the brief summary because the former is about risk information on the page opposite an ad. The risk guidance discusses risk information within the body of the ad.

Coleen Klasmeier

Coleen Klasmeier is an attorney at Sidley Austin Brown and Woods in Washington DC, and former special assistant to the FDA chief counsel.

The FDA's commitment to DTC is obvious from the three draft guidances it issued last year. These demonstrate the agency's intention of making DTC as good as can be and recognition that DTC is here to stay.

That said, some companies may believe that good TV ads are getting harder to do because they no longer have enough time to get across the necessary points. As it stated in the brief summary draft guidance (which Klasmeier worked on), the FDA is increasingly interested in a "less is more approach" rather than asking ads to list every risk on the assumption that too much information turns off consumers. The agency wants companies to pick four or five bullet points that capture the essential risks. Doing this, it believes, will make consumers more likely to read the small print or pay attention to the TV campaign.

The FDA was ahead of the curve in issuing several guidances that encourage companies to present ads with educational messages because it recognized that the honeymoon with DTC wouldn't last forever. Guidances give companies road maps and add consistency to FDA judgments on appropriate advertising, but the agency has a hard time developing them. It spent a lot of time and held a couple of public forums on Internet advertising, but it never issued a guidance because it felt that doing it would be too tough and complex. The agency feared writing something, only to see the situation change rapidly.

Companies submit many of their ads to DDMAC for review prior to launching a campaign, but the agency takes too long to comment and in the meantime the companies can't stop their business. The agency has enough people on staff to handle the workflow, but these people spend too much time on advisory correspondence rather than warning and untitled letters. This kind of work happens below the radar screen and is time-consuming and doesn't go through FDA lawyers. The agency's inconsistency is also a problem; the agency often reverses itself, depending on reviewers' subjective judgments. If the agency had more detailed guidance documents, its rulings would be more consistent.

Greg Rotz

Greg Rotz is a partner at Marakon Inc., a strategic consulting firm.

We look at DTC in context of resource allocation decisions. The pharmaceutical industry invests significant resources in marketing—about twice as much as it spends on R&D—so questions about marketing investments are big-ticket items. The payoff for DTC is typically high—we've seen ROIs around four to one, but recent events are raising questions about its role. For instance, how can one maintain the benefits of DTC while avoiding a public or political backlash? DTC is a great example of the pressure pharma executives are under; on one hand, they face real headwinds on financial performance; on the other hand, they must also address concerns from doctors, regulators and other stakeholders about the very tactics that have helped deliver performance in the past.

DTC as we know it is only eight years old. It is premature to draw definitive conclusions about its fate. While this may be a period of re-invention for DTC, the underlying questions about resource allocation (what level? What mix?) will undoubtedly live on. Pharma is not unique in this regard. Resource allocation is an age-old struggle across industries. The underlying management question then is how to create a process for making investments that incorporates those disciplines at all levels within a company.

Andrew Schirmer

Andrew Schirmer is EVP and managing director, McCann HumanCare.

The FDA is under a great deal of Beltway and public pressure and is getting more stringent. Companies may think about cutting DTC spending, but unless everyone does, there is, in the words of GSK's Garnier, "no first-mover advantage". At the end of the day, any change in strategy and approach has to be a business proposition.

As for more appropriate, or sober, advertising--that trend could end up having negative repercussions as well. The fourth or fifth campaign in general with just talking heads will cause people to start to shut down.

Overall, pharmaceutical marketing is getting more complex. We have seen a different balance of media used in the past five years. Pharma companies do above-the-line advertising and below-the-line relationship marketing, as well as on-line promotion. TV advertising incurs a certain amount of waste as it targets broadly; no one asks to have a TV spot in his living room. Print advertising requires a longer lead-time and may not have the same reach as TV. On the other hand, print gives you a deeper sell--people spend more time with it and fair balance is easier to manage. Companies are doing more below-the-line patient education. Below-the-line activities give companies the ability to spend more against higher-value prospects. And it gives companies the ability to run communications a bit more under the radar. Companies are driven by both of these realities: Overall pressures will continue on DTC advertising, but TV and print are only part of the entire healthcare communications continuum.

Rob Petersen

Rob Petersen is an EVP and director of consumer healthcare at Foote, Cone, Belding.

Everyone connected with pharma marketing knows the landscape is shifting. People are moving to appropriate DTC advertising to make sure we inform people of conditions as much as we can, but if you look at DTC in context, it is still a pretty new medium. I don't believe agencies or their clients are trying to get people to overuse products. We are trying to bring innovation to people's attention.

No one really knows how DTC will change. About 80% of DTC advertising now is TV, but this will shift for a couple of reasons. People's perception of risk and safety is different than it was a year ago and they need to be talked to differently. We want to be sure we are as fair as we can be about risks and benefits.

I do see a shift to other kinds of DTC advertising, such as DTC that addresses patient compliance. Most people don't use drugs the way they should as categories evolve. From a business standpoint, it makes sense for pharma companies to encourage compliance, but these messages may be more aptly addressed via the Internet than via television.

TV really represents the face of the industry. TV drug ads usually are 60 seconds long usually due to fair balance. I think we will continue to use 15- and 30-second ads but only to bring conditions to peoples' attention, not for specific products; in fact, our use of these condition awareness spots will increase. Print isn't as controversial because it is not as visible, but print advertising needs to change as well. That said, this industry now has an opportunity to increase credibility. It will have to deliver a more complicated message but that message might give it more credibility. We don't know the impact of this kind of message because it is so new.