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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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September 3, 2008

Direct To Consumer Ads: Wasted Money?

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Posted by Derek

It’s a truism that half of all advertising dollars are wasted, but that no one buying the ads can be sure which half it is. Advertising from the drug companies is ubiquitous: how much of that is doing them no good?

A recent study suggests that the widely reviled direct-to-consumer (DTC) campaigns may be in that category. A paper in the British Medical Journal looks at the cross-border effect of US-based advertising on English-speaking and French-speaking Canadians, on the reasonable assumption that the former group is more likely to pay attention. They picked products that had been on the market for at least a year before the ad campaigns started, and looked at the number of prescriptions among both groups once the ads started running. What they found was no effect on the prescriptions for Schering-Plough’s Nasonex (mometasone) and Wyeth and Amgen’s Enbrel (etanercept), both of which were heavily advertised. Novartis’s Zelnorm (tegaserod, now off the market) did show a 40% rise, which gradually went back down again.

A reasonable theory to explain these results starts by looking at the respective markets. In the case of the first two drugs, a number of different therapies were already available. But Zelnorm was pretty much the only thing available in Canada for irritable bowel syndrome. It could be that DTC ads are useful in letting patients know that there’s finally something for a disease that previously had few options, but less effective in pushing into a crowded area. There’s also the multiple-step barrier problem – seeing a general practitioner and then a specialist, and so on – which can mitigate the effect of advertising, depending on the drug.

But the people who would know these effects best aren’t talking: the marketing departments of the drug companies themselves. As I’ve pointed out here before, the whole purpose of advertising is to make money: if you don’t increase sales enough to more than cover the cost of the ads, you’re clearly wasting your time. And that’s why I don’t have a lot of patience with outraged comparisons of pharma R&D budgets to marketing budgets, because the latter are there to bring in even more money for the former.

If, though, some of these marketing campaigns really are wasted money, then clearly that spending needs to be redirected. And that’s what makes me wonder. No one keeps a closer eye on prescription trends than the companies that sell the drugs, and they’re in the best position to see if a given ad campaign is doing anything or not. Even allowing for the usual human quota of inertia and incompetence, it would seem that DTC campaigns must be doing something for the companies involved, at least in many cases, or they wouldn’t exist at all. It’s also worth keeping in mind that what they may be doing is not so much boosting the number of prescriptions written as keeping them from falling. In the case of the drugs in the BMJ study, you have to wonder if the normal trend would have been for the number of scripts to have declined, while the ad campaigns held them steady.

That can be hard to prove, of course, and no doubt there are some marketing strategies that have far outlived their usefulness on just that kind of reasoning. But overall, I have trouble believing that DTC campaigns are useless across the board. Some of the marketing folks are weasels, but they’re not dumb ones. (It's also important to remember that DTC ads are only 5 to 10% of the total amount spent on drug promotion, according to the figures I've seen). In the end, I can agree with this statement from the paper:

Until we better understand how direct to consumer advertising modifies prescribing for particular drugs, debates about its positive and negative consequences will continue to be based on conjecture rather than strong evidence.

Comments (20) + TrackBacks (0) | Category: Business and Markets | Drug Prices


COMMENTS

1. Petros on September 3, 2008 9:26 AM writes...

It ws intersing to see that study given how much has been spent on promoting some products by the DTC route. Claritin used to be one of the most expensively promoted by this route some years back.

Will it persuade big pharma to stop trying to get permission to run such ads in the EU?

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2. Sili on September 3, 2008 9:46 AM writes...

Ironically some DTC ads may actually be of benefit to the consumer.

Ben Goldacre has touched upon it occasionally, and it was discussed on his latest two-parter on Radio 4.

The placebo effect is greatly influenced by branding. Use are big name on the wrapping of generic aspirin and it works better. Or for that matter use the brandname on plain placebos and they still show good effect in alleaving pain.

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3. processchemist on September 3, 2008 9:50 AM writes...

#1

I don't think they'll stop trying. So called money-driven biz politics are most of the times based on ideological positions (advertising can only raise sales - stop).

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4. Sleepless in SSF on September 3, 2008 10:16 AM writes...

I wonder about the methodology of the study, but don't have access to the full text of the BMJ article to confirm. I would be very interested to see what their control group looked like. I suspect unilingual francophones are less common in the regions near the US border where DTC ads would reach the anglos than they are in more interior regions. If bilingual francophones were in the control group but were exposed to the DTC ads to a lesser extent than anglos, the study might only show that DTC ads have a low threshold for efficacy with no dose response. In fact, one might not even need to be an english speaker to be affected by the ads. I could certainly recognize a DTC drug ad in any of a variety of languages I'm not fluent in (Italian, German and Spanish leap to mind immediately) and could probably even decipher the indication, particularly if it was an indication that was important to my health.

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5. MTK on September 3, 2008 11:52 AM writes...

The effect that DTC has on prescription patterns, brand indentification, or consumer educations can be debated as the authors cite.

One thing that isn't talked about too much is the effect that all this DTC has had on the public's perception of the pharmaceutical industry as a whole. It may not be coincidental that the onset of DTC advertising was also about the same time that the industry's reputation has fallen to the point where we're in with oil and tobacco.

This dawned on me a couple of years ago when my mother, who knows nothing about the industry, said "The drug companies must be making a lot of money." I asked her why she thought that and she replied, "Because they're the only ones that can afford all the TV commercials." She didn't mind paying for her prescriptions before. Now that she has come to the realization (her realization) that they are making oodles of cash, she thinks they're bandits.

The irony of course is that while the DTC advertising may help a particular product, in the long run the political fallout from the DTC advertising may result in lower overall revenues.

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6. SelenesMom on September 3, 2008 1:07 PM writes...

One argument I've heard is that DTC is an effective way of getting people to talk with their doctors about things they are embarrassed about and often just don't bring up. That's why so many of the ads are so cringeworthy ("Gotta go, gotta go, gotta go right now!" "Viva Viagra!" To say nothing of the apparent epidemic of BPH).

Doesn't sound to me like this study picked such products.

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7. CC on September 3, 2008 2:32 PM writes...

I completely concur with MTK.

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8. CMC guy on September 3, 2008 3:05 PM writes...

Abstract of the BMJ paper states "Design Controlled quasi-experimental study..." so basic approach sounds pretty suspect to begin with (at least not by Scientist norm) and since Canadian Market/Consumers are fairly different also wonder if reasonable (put DTC during Hockey games then see if you get a spike in Canada?).

I can't say I like or pay attention to DTC on a personal level but agree there are people who should be more able to directly judge ROI so trust they are not dillusional about power of Marketing (although been places that suggest rephrase "Some of the marketing folks are dumb ones, but they’re not all weasels").

MTK and his mother makes a valid point about perception that DTC may impact although there have also been poor performance and true misdeeds that have damaged pharma's public reputation in the same timeframe. Negatively predisposed media and politicians also dominate. Wise use of DTC can be good but often concerned about future ability to conduct drug R&D since so few actually comprehend what is involved and all the inherent risks (in development and taking medicines). I enjoy Derek's Blog because he often touches on that struggle.

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9. Bruce Grant on September 3, 2008 4:00 PM writes...

Interesting paper -- and good PR on BMJ's part, given the amount of pickup this has gotten -- but it is, after all, a study of only one drug, one campaign, and one market, and considering the number of potential confounders (including a widely publicized scary AE profile for this particular drug) not a very firm foundation from which to generalize.

OTOH, pharma insiders -- who have access to both media-spend data and prescribing data across multiple brands and campaigns -- know all too well the cold, hard fact that mass-media DTC has been losing steam as a market mover for the last couple of years at least.

So the study's conclusion is right...but I don't think their data really proves it.

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10. Anonymous on September 3, 2008 4:27 PM writes...

Also one should keep in mind that there is a perception that these DTC ads take money away from R&D. There has been all sorts of media assertions that marketing spending in a company is larger than R&D. Perhaps at GM, and Ford Budwiser and Miller, but I doubt it Pharma R&D.

My mother in law use to think the Pharma companies where sticking it to the consumer. The US is the only free market to drugs left. The US consumer is really footing the R&D bill for the rest of the world you might say. She thought all this money was going into executives pockets! I let her know that it was what was feeding her retirement portfolio as well as a lot of the biggest complainers. These are the funds that hold the largest blocks of Pharma shares becuase historicaly they have always been good return on the investment. Thats going away now...

Very few people outside the industry have even the slightest clue as to the hidden costs of drug discovery. Yes a billion dolar seller can recoup the costs of its development. However it is not only doing that its also recouping the costs of sometimes hundreds of other projects that failed.

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11. Anonymous on September 3, 2008 4:39 PM writes...

Well, this is the effect on Canadian consumers in the Canadian health-care system though. I don't know the details of how prescription drugs get prescribed, but I have to think that the Canadian health-care system will dampen if not eliminate these effects, *especially* if there are pre-existing therapies.

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12. satan on September 3, 2008 6:55 PM writes...

On an unrelated note, treating your own old employees shoddily does not inspire confidence in your new employees.

________________


Roche to leave Palo Alto

Roche's departure from Palo Alto is now a certainty, the Swiss pharmaceutical company confirmed Tuesday. Some of the 1,000 employees at the firm's research and development facility on Hillview Avenue will move elsewhere and others will lose their jobs, a company representative said.

http://www.mercurynews.com/ci_10364506?source=rss

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13. A Canadian on September 4, 2008 1:43 AM writes...

From a Canadian resident, based on this description of the paper and having worked in a community pharmacy:

Sleepless in SSF's point about cross-language understanding is true but irrelevant. Most of the DTC advertising that Canadians see (since it's illegal here) is on U.S. TV stations which are carried on local cable systems: not just broadcast networks, but also channels like CNN, TLC, A&E, Spike, etc. Francophones have their own, separate TV networks and English commercials only show up on English TV programs. So even background exposure would be minimal.

Anonymous@11 overestimates the difference in prescibing practices between the countries; doctors are completely free to write whatever they want, as long as it's approved for sale, and we routinely see spikes in scripts for a particular drug as the rep makes her way around the doctors' offices. I would like to know which provinces were included in the study, because each province runs its medical plan somewhat differently, especially when it comes to prescription drugs. Some provide only basic coverage for seniors and the most needy while others, like Alberta (flush with oil money), are more generous. I know my provincial formulary doesn't cover any of the three drugs in the study except Enbrel, and they'll only pay for that if the doctor submits a Special Authority application. So cost would be a big factor in how many people actually fill a prescription for a non-benefit drug.

I get tired, though, of people coming in to ask for things they've seen on the TV that are only available in the States. So some of the DTC ads are definitely working - just not on people that can help the bottom line.

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14. Hap on September 4, 2008 9:39 AM writes...

Could DTC ads thrive if they do no good if the marketing people have more sway with the people running the companies than the R+D people? Both groups have bureaucracies that desire support and whose interests aren't the same as the companies as wholes. I don't think the people running companies believe that "sunk costs" are releveant - if they have a large organization devoted to advertising, they may overvalue evidence that advertising helps them and undervalue evidence that it doesn't.

All of which doesn't help in determining whether DTC actually works, just that the idea the companies believe in DTC doesn't necessary mean that it helps them make money.

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15. hibob on September 4, 2008 2:16 PM writes...

I think the authors used the wrong metric for their study. Writing prescriptions doesn't necessarily mean that the prescriptions are filled or subsequently refilled every month. If they want to see how well DTC advertising works, they need access to sales data, not prescription data.

A previous study found that one of the principal benefits of DTC ads was that they reminded people to refill their prescriptions.

Ka-ching.

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16. SDH on September 4, 2008 6:28 PM writes...

In the pre DTC days, new drug usage ramped up slowly, thus adverse events that had not emerged in clinical trials could be more carefully observed, reported and evaluated as the prescription population grew. Potentially serious side-effects didn't suddenly break out in epedimics involving tens of thousands of patients because hoardes of people weren't pressing for prescriptions the day after the first DTC ads ran.

I think pharma companies have lost sight of the fact that clinical trials can't uncover all potential side effects in all populations. The early period of drug sales after approval is, in reality an extension of clinical trials. A more measured rampup of initial sales is an important part of managing the risk of introducing a new drug into a large population.

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17. CMC guy on September 4, 2008 9:59 PM writes...

#16 SDH you make a very interesting point that a more rapid exposure to wider population may be causing more "sudden break outs" in serious side-effects. While this may have merit and DTC may play a role I don't think pharma (at least R&D/Clinical people) has lost sight that don't learn everything in clinical trials as are always aware that usually signals are too weak to assess properly and can take a couple years to gain the critical insights into what is real vs false responses. Trial designs are tailored and forced to meet stringent biostatisticial measures of efficacy that may not have power for much else of value. Pressures in the high Regulatory hurdles and short Patent lives make it difficult to not want to grow market ASAP post launch. A rebalance of the system could be beneficial but don’t expect much to happen to increase safety if it hints at being favorable to “excessive” pharma profits.

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18. emjeff on September 5, 2008 7:36 AM writes...

"..looks at the cross-border effect of US-based advertising on English-speaking and French-speaking Canadians, on the reasonable assumption that the former group is more likely to pay attention. "

I don't think this is reasonable at all. I'm sure the majority of these French speakers speak English.

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19. eugene on September 5, 2008 10:30 AM writes...

No, as others have said (including the Canadian pharmacist), it's a very reasonable assumption. Having lived in Quebec for a while, I noticed that even if the Montrealers did speak English, they only watched French language TV. Which is a reason for why some of them have really terrible English accents. Advertising in French would be illegal for drug companies as there is no US French speaking population big or rich enough to be targeted and they are obviously targeting Canadians. So the Francophone English speaking Quebecois never see those advertisements as they watch French language hockey.

A lot of Anglos in Quebec know French really well and would rather watch French TV as well from time to time (especially the news). And having lived beside a very large neighborhood of Hassidic Jews who don't appear to want to speak anything but Yiddish and don't look like they watch TV on a regular basis, I'd say that that assumption about Quebecers is very reasonable.

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20. WritingFrontier on September 7, 2008 2:25 PM writes...

Big pharma has been in business long enough, and have paid major advertising firms long enough, to know that this DTC is still the most effective way to reach a mass audience and, in turn, make money.

For a unique slant on this topic, your readers might want to take a look at:

http://writingfrontier.com/2008/07/12/hello-world/

Please enjoy.

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