Drug ad pressure: DTC ads dodge bullet

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The drug industry averted one possible hurdle last week when House Ways and Means Committee Chairman Bill Thomas, R-Calif., backed away from his plan to cut the level of Medicare reimbursement given to marketers for the more heavily advertised drugs (AA, April 29).

The House is nearing the unveiling of its Medicare prescription-drug benefit package and Rep. Thomas said the measure would address the $2.5 billion DTC ad industry-but won't create new strictures for the ads. Instead, it will seek to give the Food and Drug Administration additional resources to regulate the ads and conduct a study on their impact.

Mr. Thomas' pullback is contingent on House Energy and Commerce Committee Chairman Rep. Billy Tauzin, R-La., agreeing with that approach, Mr. Thomas said. Rep. Tauzin opposes legislation directly affecting the ads.


Ad groups, meanwhile, cautioned the legislation still has not passed the House and it was unclear whether drug ads might become an issue in the Democratic-controlled Senate. "We are still very concerned," said Jim Davidson, a consultant to the Advertising Tax Coalition. "I think it could come back in the next year, and a lot of stakeholders on the other side of the issue, insurance companies and HMOs, are going to push it."

As Rep. Thomas and others created a stir, industry observers had suggested marketers might curb spending to blunt the political argument that the increasing cost of drugs can be traced to the boom in DTC ads. Even so, no one was expecting drug companies to abandon DTC fully. One executive familiar with spending patterns said: "There's certainly a general anxiety in the industry, but I haven't seen any specific cuts on the consumer side at all. Those in big categories seem to be full on."

However, another executive involved in the process acknowledged that events in Washington play a role in some decision-making. "Being in the Super Bowl for a drug company, is that going to hurt you or help you? But overall, you have to say DTC works and if you believe in it, then you continue going down that path and doing what you have to do to promote your business."

An anti-DTC swell in Congress isn't the only reason one media executive said spending in this upfront for the category could be flat or only slightly up compared to last year and won't experience some of its recent exponential increases. Other reasons include cutbacks to make financial goals and a somewhat dry pipeline of potential blockbuster launches.

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