In what I think was much ado about nothing, the May 8 House hearings led by Bart Stupak/John Dingell raised no new DTC issues or concerns. The usual concerns were raised and judging by so few Congressmen attending it does not appear to be an urgent issue for most. The hearings were precipitated by the recent flap over the Liptior Jarvik ad and Vytorin/Zetia clinical studies on lack of benefit versus statins.

After hearing the same positions for years from the pro and con forces it is getting to the point where these discussions are just repetitive. The anti-forces feel DTC cons the public into asking for expensive and often unnecessary drugs. The pro forces believe DTC educates and provides a free flow of information on treatment options. Neither side has or will convince the other side of their argument.

The testimony was from doctors, researchers, drug company marketers. Highlights are below.

Nancy Nielsen, of the AMA, said DTC is acceptable if it meets its seven guidelines which are similar to DDMAC guidelines and PhRMA principles. It does want FDA pre-approval of ads and a moratorium on ads for new drugs. She said the recent Vytorin events heighten AMA’s concerns. She denied that doctors are bought off by drug companies, as Henry Waxman asserted in his opening statement on non-DTC promotion. Finally, she did not like that erectile dysfunction drugs were being advertised in daytime hours because her grandchildren saw them.

The drug marketers were aggressively questioned by Dingell and Stupak on their respective ad claims. Dingell was particularly hard on J&J’s Procrit for what he said was overstatement of benefits in commercials. All the drug company marketers said they are following PhRMA DTC guidelines which are consistent with AMA guidelines. Dingell pressed them on would they be willing not to advertise before outcome studies were completed. They all said yes since they had already done these. They also answered affirmatively to Dingell’s odd question about whether they would agree not to do off label claims in their ads. Obviously, DTC is only for approved label claims.

Stupak was hard on Pfizer related to Jarvik’s credentials and potential for consumer misinterpretation. The Pfizer team leader did a good job answering the questions confidently that Pfizer did not do anything wrong. He also questioned the claims of Vytorin about how they could advertise benefits when the clinical studies(Enhance) did not show an outcome benefit. Stupak was disbelieving that the Enhance results took so long to be analyzed and released. He also hammered J&J on Procrit’s FDA citations for misleading promotion.

Dingell wants to bring back Presidents of these companies because the lower level representatives would not speak for their entire company and Dingell was clearly frustrated with vague answers to some of his questions. His yes or no questions were not answered as yes or no but with usual drug industry caution.

Some of the Republicans defended the drug company actions and questioned whether there was any inappropriate behavior at all.

So what was accomplished? Not much, except to give a forum for Congressmen to question the ethics of drug companies. Stupak said he wants another hearing just for Vytorin. I think the issues in this hearing are more related to overall drug company clinical and claims behavior than DTC specifically. I do not expect any actions to come from the hearing that would affect DTC.

In a mock election we conducted at the 2008 DTC National, Barak Obama won handily versus John McCain winning 56% of the vote. Obama thrashed Hillary 59% to 40% in our primary. Of course this result raises questions about why an industry thought of as Republican would give Obama the nod.

It could be that John McCain is not seen as a traditional Republican. In fact he has made numerous anti-drug industry comments and favors re-importation to lower drug prices. Or, more likely it is that drug industry people have a lot more that affects their vote than just where they work.

Now, believe it or not I am also thinking of voting for Obama. I have been described as a conservative by some bloggers, but I actually voted for Carter (big mistake) and Clinton (1992 only). As I get older I am thinking more about what kind of world I will leave my children and their yet to be born kids. I know financially Obama will not be good for my bank account. On the other hand, I do care if we have a livable environment, a middle class, a quality education system, a chance to end the war, and good health care for all. I do not mention Hillary because I just cannot vote for her. I am tired of family dynasties and the Clinton style of destructive politics. What next? Chelsea in 2016!

It would be nice to be able to travel overseas and be welcomed as an American. I also would like my President to be able to get through a complete sentence without stumbling. I must take responsibility for my votes in 2000 and 2004. Yes, I voted for Bush. I did do well tax wise. Now, however, is the time to take stock about what kind of America I want, even if it costs me some additional taxes.

It would be nice if all those CEO’s who made hundreds of millions of dollars, while driving their stock prices down and laying off thousands, would be the only ones additionally taxed. I realize this is not possible given the vast societal investments needed and all those making above $100,000 will likely get hit.

Would any of the candidates affect the DTC industry? I doubt it. They will all bluster and threaten but the reality is they will not legislate DTC away. I could not vote for anyone who would destroy the industry and my business. So, although I have not decided yet, I may be one of those Obamicans. This is not an endorsement but just an attempt to explain why most drug industry people pulled the mock lever for Obama. Whether the majority of people who work for or with the drug industry will pull that actual lever remains to be seen. Given the serious issues we face as a country it is clear that drug industry people will not be voting on corporate interest alone.

We had two speakers last week at the DTC National who gave us significant new data on ROI.  I am happy to report they both concluded based on numerous brands studied, that ROI is still in the range of $1.60-2.00 per dollar invested. Of course there were failures, 16% producing negative ROI, as there were also 4% of ROI’s above $4.00. The bulk of brands fell in the positive range with averages at $2.04. ROI was about the same for television and print according to one study.  Non mass media also did well, near $3.00 return per dollar spent.

Most of our speakers were from new media such as the Internet or other non-mass vehicles. They all made the case for using more new media, even with an older Rx user target. Most of the media gurus were speaking in general terms as they did not have specific DTC expertise. In Q&A and panels, the issue of why pharma is lagging in Internet spending came up several times. There seemed to be a consensus that it is still easier to execute and present mass media plans to management, and given the good ROI, it is understandable.

What the ROI studies show is that drug marketers are not wasting their money on mass media as is sometimes passionately but incorrectly stated by many bloggers and new media authors.  That being said, it is clear that drug marketers can better use the Internet and other targeted media such as point of care. If they put in the effort to explore these media they can improve ROI significantly. This will take more time looking at media alternatives and having agencies that are willing to dig deeper when constructing plans. Clearly the consensus among all media experts was that a good big brand media plan requires both mass and non-mass to get both awareness and depth of information so critical to proper Rx use.

One of our media speakers made an excellent point that the best investment that can be made to enhance ROI is creating better ads. This should be a lesson to all marketers who spend so much time on pre-research to get the perfect strategy that they end up rushing their final executions. The consumer only sees that 60 second execution and one page print ad, not your brilliant strategy.  In a recent DTC National, marketing legend Kevin Clancy presented a study that concluded that copy that tested in the top range produced sales results twice as high as copy that tested only average.

My conclusion is that we are not seeing the death of mass media as it relates to DTC. What we have over the next few years is the opportunity for optimizing both media mix and copy effectiveness. In the era of a pharma recession this should be a priority. The gurus will eventually be right in their view of mass media. Consumers one day will have all media when they want it, with traditional commercials reduced or eliminated. That will not happen to the primary drug company target audience of 50+ anytime in the next 5 year planning horizon. On the other hand, just relying on a traditional mix is also taking the easy way out given the vast array of new media alternatives.

One of our delegates from CBS made an excellent point that the networks are not blindly watching their audience disappear. They are integrating the Internet into viewing options recognizing the time shifting. They know there will be erosion in viewing the traditional prime time shows. Expect them to be active buyers of alternative media companies.

Based on everything presented there is no reason to expect major cuts in DTC. It still works to profitably generate incremental sales. The cuts in detail forces reflect the diminishing or negative returns from an over expansion of sales forces in the 1990’s. There is no such evidence for DTC over use.  While there is much angst in drug companies over sales and profits, DTC is part of the solution to creating better profits.

Over the weekend I saw Vytorin using new DTC print ads to promote its effectiveness and safety. This was not a defense of the timing of disclosure of its clinical studies or other explicit reactions to the controversy. No, this was basic DTC. This ad challenges consumers to ask their doctor if Vytorin could help reduce their cholesterol.

The issue of using DTC when under mass attack is an interesting one. Can DTC help change consumer and physician attitudes for a troubled drug? Vytorin has gotten massive negative publicity and has provoked Congressional and media investigations. It has opened the broader issue again of the wisdom of allowing DTC for new drugs.

Celebrex is another example of using DTC to counter bad publicity. In this case Celebrex is defending the entire Cox 2 class. Its approach is not standard DTC. Instead Celebrex wants consumers to know that Cox 2’s are not any different from other anti-inflammatory drugs in terms of safety. It has the interesting approach of making all of the treatments seem risky. Basically they say, we are no more risky than anyone else who is used for inflammation, so why exclude us?

Using DTC when under a massive public attack has some advantages over the behind the scenes approach. It shows investors, employees, physicians, and of course consumers that the drug company stands behind the efficacy and safety of its drug. It says they are going to support it and fight for its rightful place as a treatment. It is also fast in getting the message out. Trying to work through the physician channel only takes time through individual detailing. Buying a national newspaper/Sunday Supplement/weekly magazine media plan covering major markets can take only days to execute. The value of a DTC counter attack is it shows existing users that there is another side to the story. It can hopefully allay some unfounded fears that current users may have.

So is it a good idea to do what both Vytorin and Celebrex did? It is like taking chicken soup for a cold; it couldn’t hurt. I do not think either ad is going to win awards. Both, however, do make the needed points. These drugs are available and do benefit a subclass of people. Schering, Merck and Pfizer needed to do something to tell consumers there is another side to the negative media stories. DTC happens to be a good way to tell that counter story to consumers and control the entire message without media interpretation. I do not know if there will be a positive payback for either campaign, although Celebrex has been running this campaign for over a year so I assume Pfizer is seeing value.

A decade ago, drug companies would have tried to let the negative stories die a natural death. They would have not done defensive DTC, choosing a low key approach instead. Today, bad stories do not die easily. They get posted, blogged and rehashed. Rumors abound and consumers get misled. That is why DTC needs to be a defensive tactic when drugs get attacked. Expect the PR departments to continue using the paid media when one of their blockbusters faces tough times.

The latest Nielsen DTC spending numbers for the full year 2007 show a 3.1% overall decline. Is this the beginning of a downturn in DTC spending? Is 2008 going to be a bad year for media companies that are so dependent on DTC ads?

A look inside the numbers shows that the decline is concentrated in a few major brands that cut spending and not a broad indication of cuts across most brands. A few major brands cut spending enough to cause the overall decline which was $173 million out of over $5 billion in 2007.

We had the generic switch of Zyrtec which caused their branded ads to drop $50 million. The pulling of Zelnorm caused a loss of $90 million in spending. Crestor dropped significantly in 2007 by $134 million but looks like it will be up in 2008 capitalizing on Vytorin’s problems. Nexium is down $80 million. Neulasta dropped $66 million. Lamisil cut $95 million.

On the other hand many brands increased spending significantly to balance these decliners. Cialis was up $92 million, Gardisil in its early launch stage was up $56 million. New brand Enablex was up $52 million, Caduet was up $53 million and Cymbalta spending increased $27 million. Of brands spending more than $10 million in media, 36 were cutting spending in 2007 but 34 were increasing their media.

My point here is that there is no general downtrend. That would take far more brands reducing spending than we saw in 2007. This is not the start of a major spending decline. Some analysts will likely talk such a trend but a new brand launch or two could quickly reverse it. I am sure DTC brand spending is under careful watch by management. They are indeed reviewing marketing expenses in these tough times. Sales force expenses are being cut. DTC Marketers will be under pressure to continue to prove ROI. A 3% decline, however, is not indicative yet of any long term drug industry dissatisfaction with DTC.

In 2006 we had 17 bands spend over $100 million, in 2007 there were 18. Big brands are still spending huge sums. Based on the 2007 data, one could say we are in a flat period, where it is anyone’s guess whether we will be down 5% or up 5% in 2008. The fact is, spending decisions of one or two brands will determine if we are up or down in 2008. I imagine some brands will realize that DTC is just a bad investment for their category while others will see the favorable ROI. The balance in the number of up and down spending brands shows how brands are constantly evaluating their spending and coming to very different conclusions about the wisdom of DTC. That is the lesson of the 2007 data.

What the drug industry does not need is another expose book on its marketing practices. A new scathing book, Our Daily Meds from New York Times Correspondent Melody Petersen, adds to the body of literature looking into the drug marketing machine. I have not yet read it, but I did read her interview with Pharmalot to get the gist.

She has the usual complaints. Too much push for expensive, sometimes unnecessary drugs. Too much behind the scenes use of monetary incentives to physicians. I get it. It is not that she or other drug marketing critics are wrong. Drug marketing is designed to sell drugs. Ok, I said it. It is not usually to educate objectively. Education of either consumers or physicians is an effect, not a goal of drug marketing.

Like it or not, our whole health care system is rife with marketing pitches. Doctors, hospitals, insurance companies, and health information media all advertise their wares. Drug companies are just a part of a larger capitalist system. Our physicians are not independent decision makers on the drugs we get. If there were no drug marketing, do we really think we would get the best drug for us? Would insurance companies cover the best drug on the market or only the cheapest? If we were to re-invent the whole system, then a world without drug marketing may make sense. For now, drug marketing is a way to compete in a free market of health products. It is world where no one can be totally trusted to be on your side.

What most liberal critics assume is the consumer is a helpless soul. They want to protect them from being duped by slick advertising. I give consumers more credit than that. They know a drug company is trying to sell them on that product. They know it may not always work as well as the ad implies. They know other treatment alternatives exist. So can we give consumers a little credit for being skeptical on ad claims?

Does all this drug marketing create demand for products that may have cheaper equally effective alternatives? I am sure it does. Does all this advertising also get people to visit doctors and then discover other serious health issues? I am sure it does. Free market advertising is messy. Consumers are always getting pitched and often buy things they do not need. I look into my wife’s closet and see ten handbags she does not need that are wildly overpriced. I see my used golf collection of expensive gimmicky clubs that did not lower my score despite the ad claims.

Critics say drugs are different and we must do more to protect the easily conned consumer. We do just that by having FDA review all ad claims. I wish the Federal Golf Administration existed to tell me if the golf club advertised really lowered scores. Consumers also must have their doctor conned before he will prescribe, so they have two added layers of protection.

I know our system is imperfect. If we want to have a single payer system, with government boards reviewing efficacy and cost trade-offs of all drugs, then maybe we will have the perfect non-marketing influenced system. Of course, are governments really objective? Their goal is usually to cut cost. So, in what system would we, as citizens, know we are getting the best drug for us? I guess this is the classic liberal versus conservative argument. Liberals usually trust government more than private industry. In some cases they may be right. I am not sure eliminating drug marketing, however, will create a more consumer valuable system. The debate is worth having and books like Our Daily Meds raise worthy issues. I guess I fall on the side that more imperfect information from drug makers, critics, insurers, employers, and physicians is better than one source of government controlled information.

This bill is meant to discourage payments to doctors by outing them and the drug company on a public site. The $25 level includes about everything a drug company does for doctors. The box of pens, the office pizza, as well as consultant fees would be covered. Of course this would be an administrative nightmare for detail forces. Penalties are high per violation so a rigorous tracking system would be needed at the detail rep level.

The idea of exposing influence on physicians is not a bad one. It is reasonable for patients to know what their doctor gets from drug companies to determine if they are getting objective advice. The issue is how to make such information useful to consumers. It is very hard for a consumer to differentiate types of payments. For example is wrong to use a doctor to consult? Is it wrong for them to speak to other doctors on a disease or drug as a paid speaker? Is it wrong to get a few pizzas from a drug rep? Any bill requiring reporting needs to think through how the public will be educated to evaluate those payments.

This bill seems overly onerous and of not much value to public understanding of financial relationships between drug companies and doctors. I would support public disclosure of payments of significance such as for speaking to other physicians on a drug company’s behalf. I would also support disclosure of free trips to symposia or other influence peddling events such as Super Bowl trips. Clearly reporting large payments is useful in public understanding of how drug companies influence doctors.

At $25 and up, this bill is excessive in administrative burdens. No doctor is overly influenced by pens and pizza, although it may get some goodwill among office staff. On the other hand, most observers believe large consultant or speaking fees do have an influence. It would be useful to see how much of my doctor’s income is supplemented by drug companies.

Clearly drug companies prefer no disclosure because they do want physicians to be discouraged from working with them. A little sunshine on the relationship would not be a bad thing, however, as long as it is for amounts that may in fact cause influence. I would start at a level of $500 or more and let the pens and pizza slide.

Although DTC is often criticized by Congress, at least it is highly transparent. Both the message content and the dollar amount spent are publicly available. On the other hand, relationships between drug companies and doctors are often the least transparent. I would expect these relationships would be the Congressional priority in the next few years. They may not like DTC much, but they know the bulk of marketing spending remains with physicians.

There are no great surprises in the latest survey of consumers by The Kaiser Family Foundation/USA Today and Harvard School of Public Health. Consumers are not too happy with drug companies. The favorable rating as an industry ranks above oil companies and health insurance companies but below airlines, banks, food companies and doctors.

Only 15% have a very favorable view of drug companies. Mostly this is because consumers do not like the prices they pay. Of those unfavorable 68% of the negatives are related to prices and high profits. Among all respondents 79% said drug prices are unreasonable and 76% feel they pay higher prices than Canadians, Mexicans and Europeans for the same drugs.

Respondents think high drug prices are a result of several factors. Creating profits is first, followed by the cost of R&D, cost of advertising and marketing, and cost of lawsuits. What is very concerning is that 75% of consumers still want more price controls even if it meant less R&D would be done.

Consumers still highly value the drugs developed. 56% feel drugs reduce costs by preventing illness. 59% feel drugs prevent costly hospitalizations. Over 70% think drug companies offer reliable information on efficacy and safety. 80% feel drug companies develop new effective drugs. Only 55% feel drug companies quickly release new safety concerns.

The survey probed about advertising. On the plus side the price assistance programs are getting awareness. 58% have heard of those programs, but 65% say these programs have not gone far in enough in price reductions. 70% say drug companies are more concerned about profits than helping people. That is not a good sign given all the corporate ads on their research.

On DTC, 91% have seen DTC ads. 53% feel DTC is a good thing, while 40% think it is a bad thing. 56% of consumers think drug ads do a good or excellent job of discussing benefits while 45% think the same about discussing side effects. What is concerning is that 77% think DTC costs make drug prices expensive, and 66% think drug ads encourage them to take medicines they do not need. On the positive side is that 67% believe drug ads educate them on treatments they may not have been aware of previously.

So what does all this data tell us? Consumers find good and bad in DTC. They want it to stay, but feel ads do raise prices. They like its educational value, but feel it is too focused on selling us on drugs we may not really need. They generally think it is fair in presenting benefits and side effects. Their overall view on pricing should be a great concern in this political year. There is no easy solution on pricing, but this issue will not go away no matter how much drug companies talk about expensive research. As most past research has shown, this new data shows consumers are still ambivalent about DTC. My guess is that this new data will be cherry picked by both sides when presenting plans to change DTC. I doubt the information from the study is strong enough, however, to support any significant change in DTC practices.

The Democratic candidates, as well as John McCain, seem to have drug companies in their cross hairs for profit reduction through price controls. All have characterized drug companies as profit hungry, unfairly charging U.S. consumers higher prices than most of the citizens of the free world. Consumers generally believe these charges as well. Drug prices, say the candidates, should be lower through re-importation and price negotiation through Medicare Part D.

These same candidates bemoan world price competition for other industries. Where have the good paying industrial jobs gone? Why are Ohio, Pennsylvania, and Michigan losing their job base? The Democrats want to protect these jobs. I have no problem re-invigorating our manufacturing sector. I am even willing to pay a bit more for U.S. made televisions, clothes, toys and other things now made largely in Asia. What the Democrats expect us to do for these industries is exactly what they object to for the drug industry. Keeping jobs here for any manufactured good usually means higher labor costs and higher retail prices.

I see some hypocrisy here. The drug industry is a huge employer in the United States. It is a significant economic contributor to New York, New Jersey, North Carolina, Illinois, Pennsylvania, Michigan, California, Indiana and Delaware. Every state has drug detail reps. Here is an industry that is now doing exactly what the Democrats want to do in the future for rust belt industries. That is, through protectionism, they would make U.S. consumers pay more at retail to fund higher U.S. manufacturing costs. Protecting the middle class has a useful societal purpose and it may be advantageous for society to import less, pay more for U.S. made goods, and employ more. 

In the short term candidates get political rewards for savaging drug companies. Long term, however, making the drug industry less profitable will only encourage it to transfer jobs to Asia. We may in fact get lower drug prices, but the dominant U.S. based drug industry will become another Asian based research, marketing, and manufacturing industry. Can India do most of our R&D? Can China make all our drugs? Can they produce promotional materials? Yes they probably can.

Senators Obama, Clinton and McCain ought to think hard before they risk damaging one of our most important industries. What do they expect drug companies to do if they force prices down by 30%? These drug companies will seek to lower costs, most of which are in R&D, manufacturing, and marketing. Jobs will be lost. In fact many administrative jobs can also be outsourced to India.

The bottom line is that we have few industries left that have not been lost to world competition. The drug industry is largely American made. Paying more is a strategy to keep it healthy, as it may be for other industries. Getting the best world price to consumers has its advantages, but as we have seen, costs U.S. jobs.

It is over and done with. Dr. Jarvik is rowing into the sunset or in his case we’re watching the stunt double row away. I think Pfizer got a raw deal in all the criticism as I have written previously. No consumer took Lipitor because of Jarvik’s scientific or athletic prowess. He may have stimulated some interest in asking for more information about Lipitor but that is about all. Let’s give consumers and doctors more credit for their decision making. No consumer was harmed because Jarvik did not practice medicine.

So what should we all take away from Pfizer’s decision to pull the campaign? They had to pull it because consumers and physicians were focused on Jarvik’s credentials rather than on the product itself. When a celebrity gets in the way of the message it is time to change. The campaign was good, but there are likely plenty of good back-up campaigns for Lipitor at the agency without the celebrity theme. Lipitor did fine since its DTC launch with several non-celebrity campaigns.

Use of a celebrity can be more of a liability than a help. They are always susceptible to both past and future negative news. They cost a lot and most people have little faith in the word of a celebrity endorser. When celebrities are used more as actors that is fine. Sally Field is great for Boniva because she is not acting as an expert, just an aging actress trying to stay strong. Celebrities who are used for medical expertise will be given the full investigative treatment. Jarvik is a lesson that the numerous critics are watching carefully to embarrass the drug marketers.

Pfizer will be given little credit for pulling the campaign. It will be seen by critics as a capitulation to being discovered as misrepresenting the credentials of their spokesperson. The critics will use the Jarvik situation as a reason why DTC misleads the public. I am sure FDA will be very careful in vetting celebrity endorser credentials in the future. Clearly they are under intense pressure to make DTC harder to do. I would expect some additional risk and side effect requirements to be enacted in the future.

I am quite certain Pfizer never secretly intended anyone to believe Jarvik was a renowned heart surgeon. He is what he says he is and no more. That being said, the lesson here is that if consumers may misinterpret the endorser’s credentials, then the burden is on drug companies to prevent it. Following the letter of the law is no longer good enough. As aggressive as marketers and their agencies want to be in their claims and creative power, the negative impact of having them misinterpreted is high. The Jarvik case should be studied by all DTC marketers for the lessons and risks of celebrity endorsers.