The Wall Street Journal’s Melinda Beck wrote a fascinating column (11/18) on the power of suggestion. Titled “When Drug Labels Make You Sick”, Ms. Beck explores the little studied issue of how reading the litany of side effects actually can make you more prone to disease. The FDA is rightly concerned with informing consumers of the risks they take when beginning use of an Rx drug. All of us are entitled to know if the drugs we are prescribed can kill us or cause debilitating side effects.

The issue I have raised with FDA over the years is how to accurately tell consumers the real odds of getting a bad side effect. The litany approach that is common to all drug ads does not give odds. The package insert shows occurrence of side effects as a percent of people studied but that is something most consumers do not read or cannot understand.

Therefore, most consumers will get their fair balance entirely from the television or magazine ads. Some may read the attached brief summary, but most of those do not have the chart on percentage of patients getting a side effect. Now let’s explore more of Ms. Beck’s column.

The She cites several studies which show how powerful the power of suggestion is making us think we have side effects. In a study last year men taking a drug for prostate enlargement who were informed it could affect sexual function were threee times more likely to actually have erectile dysfunction than those not told. In another study, subjects were given sugar water and told it could make them vomit. Of those told of the potential side effect, 80% actually did vomit.

The point of Ms. Beck’s column is that we need to be judicious how we approach patients with side effect information. I believe we need to do a better job giving patients the real odds of something happening to them. Most side effects are minor and temporary. The serious ones are very rare. The issue for FDA and drug makers is how to properly inform prospective users without scaring them away from treatment. I certainly want to know if I could die, but I also need the odds of it happening. The ads do not give that information. A 1 in 100 chance is much different than 1 in a 1,000,000. Ms. Beck cites a study that shows that the baseline for feeling fatigue is 39%, 14% had headaches and 5% reported dizziness. This is with no drug treatment.

I propose FDA study the effect of risk communication in the context of the scare effects. They focus on adequate communication of risk and side effects but not on whether it is interpreted wrongly. It would be interesting to see consumers place the odds of occurrence after seeing ads. I bet they vastly overstate the odds of serious side effects happening to them. Clearly the media is guilty of hyping negative outcomes with their “death in your medicine cabinet” type stories. I do not want to under play sides effects but I also want a system that portrays them accurately. A fatal side effect is always tragic but that risk may be well worth it if 500,000 others are helped for every death. I am afraid that telling consumers everything that could happen to them is not protecting them or informing them. It is a shotgun approach that makes regulators feel better but does not promote real consumer protection.

Ad Age ran a projection of DTC spending in 2008 using the first 8 months of TNS data. Writer Rich Thomaselli says 2008 may be down 9% based on the projection. That would put the DTC spending back to 2005 levels and under $5 billion. Ok I will not quibble with the Ad Age estimate. I think it will be slightly better because the networks and local media will be offering some incredible deals on ad rates. The numerous ad declines from auto, tech, travel, and retail will lead to some opportunistic spending by pharma. I’ll call the year down 6-8%. We also need to see the brand by brand data to see if we have a general decline or one concentrated in a few categories or a few big brands stopping DTC.  

That is not a great number but not anything to get alarmed about. In general Rx sales have fallen by about 2% and may be higher by year end. Drug company marketing budgets are being cut as they are for most businesses. So, is this something that we can expect to continue in 2009? I would guess we will see a further drop of about 5% in 2009 which could be improved with a big brand launch or two.

The macroeconomic environment is only a minor contributing factor to what pharma spends on DTC. The two major drivers going forward will be the number of new products launched and FDA regulation/guidances. If a regulatory mad Congress and FDA decide to make DTC tough to execute, then we will see marketing money shifted to other drug marketing areas. Can they make it tough? Yes, they can interpret guidances differently or create new regulations adding oodles of risk requirements. That would make the 60 second ad very hard to do while still selling any product. If Congress had its way DTC would be 59 seconds of fair balance.
The ad lobby will very likely manage to save broadcast DTC by agreeing to voluntary moratoria, increased risk disclosure, and “voluntary” pre-clearance. The drug companies have gotten used to DTC and despite all the negative talk about ROI from some studies, DTC still delivers a nice return. While DTC is still secondary to medical marketing, it has an immediacy and reach that medical education does not. Most brands desiring to be a blockbuster will need DTC to succeed. The decline in spending, even by 5-7% will put the squeeze on any medium that cannot justify its ROI value. I am afraid some experimental media will be victims of the lost budget. That will make it harder for health care media start-ups to get traction. I doubt 2009 will be a year of risk taking. What will be done will be what worked in 2008. I can also predict that 2009 will not be the year of the Internet shift. Many of our conference speakers have predicted the end of mass media for pharma. I think given the lower costs of mass media due to the general decline in advertising, pharma will find bargains galore on network, cable and print. Point of care will also see increases because of the targeted higher ROI.

I remain very optimistic about the long term financial success of the industry and DTC. Obama gets us more covered consumers buying more drugs. It is true they will be at lower prices but pharma has been cutting overhead costs and can live with lower prices. It has also been making numerous deals with smaller and more nimble R&D houses. Pipelines will get better. The golden age may not reappear for a few years but when it does expect a new boom in marketing spending. Fortunately, the pharma recession preceded the general downturn and that means pharma will be coming back before the other sectors. The downturn in DTC spending is not something to cheer but is relatively mild and expected. I’ll take down 9% for 2008 and 5% in 2009 given what some other industries are seeing.

Congratulations to Senator Obama. It is an exciting moment whenever we have a new administration, particularly in this time of fear and pessimism. For those of us who work in the drug industry “change” will be both good and bad. First, let’s get to the good part. It is likely we will evolve to greater insurance coverage of our population in the next few years. That means more potential users of pharmaceutical products. We also can expect fewer people to go bankrupt because of illness. That is a good thing for society.

For free marketers, the increased government involvement in health care is a bad thing. I have said previously that I have renounced my total belief in free market solutions. Health care is too complex to expect the average citizen to make informed cost effective decisions no matter how much information is available. On the other hand, merely forcing insurance companies to cover everyone is also a faulty solution. No insurance company or health care provider will lose money to treat people just because government wants it. I do not expect Obama’s wide coverage plan to work as well as he says.

What will happen to the price of drugs? We will get negotiation of prices through Medicare. Prices will come down although not as much as politicians think. After all, health insurers have been negotiating hard on Medicare’s behalf for the past few years. Also, we will get re-importation from Canada and Europe. That will also not be as impactful as Congress hopes. Drug companies will produce enough for local demand and any re-importation will create shortages in those countries. National governments will step in to regulate exports to the U.S. and stop the flow.

Will DTC be hurt under the Obama FDA and Congress? I am not expecting draconian changes. There will be increased regulation mostly through more conservative review of ads, more warnings and fines. I also expect risk guidances to be more imposing and create more problems producing a 60 second branded ad for broadcast. DTC will not be banned or made impossible through regulation. Print, web, direct, and point of care may benefit if more risk disclosure is required. Given the financial debacle, folks like Henry Waxman will get most publicity out of hammering Wall Street in the first year. He will get to pharma eventually, but somehow the “horrors” of DTC ads seem minor compared to a meltdown of our economic system.

I welcome a renewed look at our healthcare system. It is a mess now and is not sustainable given the absurd annual cost increases. I think Democrats, however, need to realize that nationalizing healthcare will create significant problems in the transition period. We may end up with a Canadian system but not without major angst from the current healthcare providers, patients and insurers. It may take a decade to ease into a government run system. I also urge lawmakers not to take free choice out of the system. That means allowing doctors to take fees from anyone seeking extra services. If I want to pay out of pocket for faster service that should be my right. Mandating slower care to ensure everyone is treated the same will not work and just encourage Americans to seek premium services elsewhere. This is what many Canadians do now when they need their MRI.

So Mr. Obama, good luck in this complex time. The Democrats now have the power to make significant changes. I hope they use that power wisely. No solution is as simple as the campaign slogans used by either party. National health deserves a fair hearing. It works elsewhere. Americans need to realize, however, that government health means rationing and longer waits. It may mean less choice of physicians and drugs. That may be what we need to prevent bankrupting us all. Let’s just think it through Mr. President-elect. We have waited this long using our patchwork system and we can wait a few more years to do our homework.

I am considered a Pfizer retiree. I worked there for about three days after their takeover of Warner-Lambert in 2000. I am covered for health insurance by the Pfizer retiree plan. When I received the retiree newsletter last week I was rather shocked to see that insurance costs will rise dramatically starting in 2009. Apparently Pfizer and many other corporations have capped their contributions which reached a peak in 2008. So all retirees are going to carry the up charges from now on.

Pfizer says our costs will be $5216 in 2009, $8357 in 2010 and $11,808 in 2011. Sounds like a bubble to me. The company says these rates are still less than if we went out on our own to buy health insurance. I do not like paying these rates but I can afford it. What about the majority of their retirees who cannot afford such rising costs? I imagine there are millions of retirees who face this same dilemma from thousand of corporations.

The New York Times ran a front page story on October 22 titled “In sour economy some scale back on medications.” The story profiled people who have stopped taking their prescriptions or cut back on doses. The big pharma companies will give drugs to the poor for low prices or for free but not give it to the middle class. Are we nearing the tipping point from free market medicine to government control?

We cannot continue on our current cost path. That much is clear. The issue is what system will control 60% annual rises in premiums. What system will help control hospital and drug costs effectively? My father-in-law, who I loved, died of cancer recently. He was terminal and wanted to die in peace at home. Unfortunately he spent much of his last month in a hospital getting every test possible on every organ even though every specialist knew he had weeks to live. I am guessing his hospital bills were several hundred thousand dollars trying to treat the untreatable. We cannot go on like this. Rationing care must be part of the cost solution.

No solution to the bubble is easy. Neither McCain’s nor Obama’s plan that will solve the problem. Just insuring everyone does nothing to reduce cost of care. In fact it makes care more expensive in total. Since drug costs are only about 10% of total health costs, attacking drug companies is not the answer. Of course the drug industry can and should do more to reduce cost. Their individual and group efforts are good but not sufficient.

I hope the next Congress and President will deal openly and honestly with our cost problem. The housing and credit bubble was obvious only in hindsight. The health bubble is obvious now before it bursts. I used to be a free market advocate for solving healthcare costs. I am changing my views because healthcare is just too complex to expect the free market to succeed. Some government control is needed. Can a blended free market and government system work? I am afraid it will not.

The bubble will burst sooner than later if we do not revise our entire system. I am afraid our elected officials will only take action once forced to do so. It may take the bubble to actually burst to get them take on politically charged issues. That may take more guts than Congress has but let us all hope they take up this unsustainable cost problem.