While the traditional definition of DTC advertising is for pills, inhalers, devices and injections to treat medical condition or illness; the growth drivers may come from other DTC categories. One of the major growth areas will be in aesthetic products. A new report from Global Markets Direct predicts solid annual growth from cosmetic procedures forecast at 6.5% per year through 2016.

Obviously, this category thrives on DTC advertising because demand creation is critical for an elective treatment not covered by insurance. Our aging population seems to demand perfection. Look at the shows from the Real Housewives series as examples of a society driven to look good. Most of the women profiled are proud to talk about their numerous enhancements. Men are also increasingly using Botox and getting facelifts and hair transplants.

What is interesting is that there is a huge potential international market long term as developing countries will increasingly be able to have enough discretionary income to support enhancements. Currently 60% of cosmetic enhancements come from the United States. That means long term opportunity in the emerging middle class markets. I am sure Real Housewives of Beijing will want to emulate Orange County in breast size and smooth skin.

Another potential boom category for DTC is preventive testing. Early diagnoses and treatment will grow as government puts more effort into cost effective treatments at early stages of disease. This means genetic testing companies will see a boom in sales as they get better at identifying subsets of the population that will benefit most from Rx and medical device treatments.

I still see a healthy DTC market for traditional pills for existing categories. Our society is still getting fatter and more prone to diabetes, high blood pressure, heart disease, impotence and other diseases. Major drug companies will see price pressure from government and other payers. Therefore market expansion will be crucial to success and DTC is great at creating awareness. More users, even at lower prices, will keep drug company profits strong and society will be healthier.

So whether in traditional DTC categories or new or expanding ones, it is highly likely DTC advertising will grow significantly over this decade. It is also likely other countries will be more liberal in allowing health ads from drug companies, although in the disease prevention and treatment area, not in branded ads.

The tsunami of independent voter discontent evident with the last three elections in Virginia, New Jersey, and in this week’s Scott Brown Massachusetts win means major reconsideration of health care reform. I have called for reform and meaningful reform. We must not let our citizens go broke paying for health care. We must not deny care to people with existing problems. We must not let insurance companies use the practice of rescission because someone forgot to report a minor past health detail when they applied.

All these things can be done and should be done with a strong bi-partisan consensus vote. Republicans must understand that doing nothing is unacceptable to the majority of Americans. On the other hand a Democrat led only bill was also unacceptable to the American people who know that government cost figures are always suspect. Few believed that the current bill would solve their cost problems.

My health plan wish list would allow anyone to get free preventive and emergency care at government subsidized clinics. It would allow national competition for health insurance. It would reform malpractice insurance. It would require portability of health insurance from job to job. It would require full fee disclosure from doctors and hospitals so consumers can decide if co-pays are worth it. We need to be sensible and solve the problem with as little government involvement as possible.

The Brown win will convince most moderates to back off the current plan no matter how much pressure Obama puts on Congress. These moderates know the Massachusetts vote is a referendum on discontent with health reform and other issues. Ignoring Massachusetts would be political suicide for Democrats. If they were smart they would vote out Pelosi and Reid and replace them with more centrist leaders. The infuriating negotiations which led to sweetheart payments to several states to buy their votes were the final nails in the coffin. Americans know politics is messy but they thought we were getting a new process where reasonable people in Congress would do what is best for the people. Instead we got complexity and pork. More of the same was what we got.

I want reform and want it this year. How about letting the centrists develop a plan that can get 75% of the votes in the Senate and House? There is wide agreement on what is bad about the current system. The problems can be solved. Obama was elected to change the process. Here is another opportunity to prove he is the transformative President. To do that he must insist that a bi-partisan bill is required rather than a one party plan. That means he must lead and inspire legislators. Change we can believe in must be made a reality.

The media stories on DTC are still frequent. USA Today ran a story on banning DTC on 8/10. This follows the New York Times story on 7/27. Obviously, the mass media finds DTC a subject that interests its readers. Despite evidence on DTC’s relatively small impact on sales, albeit positive, the popular belief is that DTC is greatly contributing to improper utilization and higher drug prices. I saw the USA Today story was mentioned by a website call the Consumerist. There were over 20 mostly anti-DTC consumer comments on the story that all were on variations of the two issues mentioned above. I am afraid consumer activists need a lot of continuing education on the real impact of DTC.

As I explained in this story to the reporter, DTC has no impact on raising consumer prices. How can $4 billion of advertising on a $291 billion drug outlay really affect prices? Let’s take Lipitor as an example. The drug does about $8 billion in sales and probably spends about $100 million on DTC. That is about 1.25% of sales. So, assuming Pfizer would stop ads and rebate the entire DTC cost; that would be only a 1% reduction. That is not what would actually happen if DTC was banned. Pfizer would not lower the cost because the government forced them to curtail DTC. That money would go to other promotion or drop to profit.

I think the drug lobbyists need to argue that in fact DTC lowers consumers’ prices. If the government or private insurers want to negotiate, they need brands familiar to consumers to play one brand against the other. DTC creates awareness and also creates acceptance of alternative brands. Once consumers are equally aware of several brands, it is easier for a doctor and plan to substitute the lower cost version. Lipitor knows they have to compete with Crestor, and generic Zocor and Pravachol. That competition lowers prices.

The other argument against DTC that still has traction is that DTC somehow interferes with the doctor’s ability to prescribe what they want. That assumes doctors have all available information and data and are objective. In reality, doctors are not always up to speed on available drugs and rely on habit many times. They are also controlled by insurance plans as to what drugs will be covered and at what co-pay. DTC serves as an alternate source of information that provides a check on what the doctor/insurance plan does. Maybe a consumer inquiry based on DTC gets a doctor to study a new drug or give it a try.

The other frequently argued issue is that the U.S. and New Zealand are the only countries to allow DTC. If it is good for the consumer why does the U.S. stand nearly alone in allowing it? That is because countries that are single payer want control over what their citizens learn about drug treatments. They want no pressure from their citizens on what to allow them to get. That makes sense in a single payer world most interested in providing adequate care to the entire population at a fixed cost. The issue for Americans is do they trust that government can best decide which drugs they can get. DTC is very American by providing an alternative to government provided information. The system of tiered co-pays allows the payers to encourage cheaper drug choices without banning information on newer, branded drugs.

I am afraid that the media interest in whether DTC is good or bad will continue for a long time. As long as some Congressman wants to hammer drug companies DTC will get coverage. All heath care providers now use advertising. Hospitals, doctors, and medical test centers advertise. One could argue that no one should be able to advertise health care products and services covered by insurance. That may reduce demand for health care and save money. That argument can be made for many products government would rather not have us buy. Is that the way we want to go? I hope not because it is a very slippery slope.

By government regulation prescription drug advertising is under much greater scrutiny than other health advertising. While that is the way it is, one has to question the logic. A consumer, who is barraged by all types of health product ads, is somehow less protected from claims made by OTC’s, supplements, weight loss products, exercise equipment, and physicians and hospitals.

A hospital can claim it has brilliant doctors who can cure your cancer. A weight loss supplement can claim it reduces deadly belly fat. An exercise device can claim rock hard abs in minutes of daily exercise. Somehow Congress in their infinite wisdom treats prescription drugs as something worthy of super regulation while letting numerous other medical products skate free of providing proof of efficacy and free of risk disclosure.

Most disturbing is the freedom doctors and hospitals have to boast great success and expertise in their ads without any substantiation. Not regulated, they can use anecdotal stories at will showing patients boasting of cancer cures. They need not clutter their ad with any statistics on success rates or risks of staying at their institution. A recent (12/16) New York Times Article by Natasha Singer profiled the problems with hospital advertising and the lack of regulation.

Consumers need and deserve consistency in how medical ads are regulated. If we can have once in a hundred year health care reform we should be able to figure out how to put health care products and services on a fair footing in terms of benefit and risk disclosure. Prescription drugs are serious medications and should be regulated heavily in ad claims. I would argue that choosing a hospital or treatment center is also deadly serious and deserves the same level of claims review. Many supplements are downright dangerous taken incorrectly but escape serious scrutiny from regulators. If our goal in America is to provide better quality care at lower cost, then all health care advertising needs to be regulated whether it is a product or service.

Congress, as part of a final health reform bill should give FDA or another part of the federal government jurisdiction over health claim advertising. Americans are wasting precious health care dollars on products that do not work as advertised and potentially dangerous. Prescription drug advertising, although widely criticized, is at least scrutinized by FDA for accurate information. There are powerful lobbies designed to keep many health products free to make unsubstantiated claims. A Congress that claims to want to protect the “little” guy needs to act to equalize claims requirements.

This year promises to be a transformative one for health care. Once Congress finalizes a reform bill we can expect a number of things to change, albeit not immediately. The reform bill will not take effect until 2013 or 2014 but preparations for change will take place in 2010.

First, for drug makers it is clear their market will expand as more people get coverage and will get more affordable prescriptions. That broader coverage means more need for awareness ads, particularly for drugs for younger people who are more likely to be currently uninsured.

Second, it is also clear that drug companies will face more intense negotiation from insurance companies and other payers. The margins for payers will be squeezed under health reform and they will try to recoup that margin from suppliers of services and products including drug makers. That means drug companies will carefully assess promotion budget allocations. We can expect more management demands for proof of ROI.

Third, there will be an increased emphasis on prevention in the hopes that costs will be better controlled. The reform bills mandate coverage for well care check-ups. That is good for drug makers because many people will be diagnosed for the first time with treatable diseases such as high cholesterol, diabetes, and blood pressure. That means more ads for condition awareness and screening from drug makers with products in those categories. It also means growth in home diagnostics and genetic tests to identify likely disease sufferers. That means more consumer ads for diagnostic products.

Fourth, with doctors getting their government reimbursements increasingly squeezed, I would expect them to be more marketing oriented to figure ways to increase their incomes. That should lead to numerous promotional partnerships with drug companies and service companies. Although doctors will deny being influenced by added revenue opportunities, they are just people trying to maximize income. For example, they may want to charge companies to send patients literature and product information. Drug stores charge drug makers for those mailings, so why not doctors?

Now, as for DTC spending I think 2010 will be a pretty good year. Once we have some clarity from the final bill, drug makers will be able to plan with more certainty. DTC looks safe from Congressional limitations, as well as other traditional marketing such as detailing and meetings. Given a general economic improvement, we should see DTC spending at least equal to 2009 with a possible increase of 1-3%. I believe the DTC budget bleed is over. In fact I would expect DTC spending to once again pass $5 billion by 2011.

DTC spending is of course dependent most on new drug launches. We have had some weak years recently and one can only hope that we are closer to break through drugs in the near future. Given our massive issue of medical costs, finding drugs to better treat and/or prevent illness seem to be our only real hope for affording to treat an aging population. I remain quite bullish on drug company prospects and that means I expect a healthy dose of promotional spending. Things look a lot clearer than at the beginning of 2009 and that allows for better planning from drug companies and their suppliers.