Pharma Execs Told DTC Ads Can Lower Health-Care Costs

'Compliance Marketing' Cited as Way to Get Consumers to Stay on Their Meds

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WASHINGTON (AdAge.com) -- Former Secretary of the Department of Health and Human Services Tommy Thompson spun the idea of direct-to-consumer advertising 180 degrees, telling pharmaceutical executives and their agencies that DTC marketing can be an asset in helping to lower skyrocketing health-care costs.
Tommy Thompson
Tommy Thompson Credit: AP

"You have the power through your ads, your publicity, through drug companies themselves and through the press to do something about this," Mr. Thompson said April 26 at the sixth annual DTC National Conference, sponsored by DTC Perspectives magazine.

Praised by former secretary
After listening to an opening day of dire predictions and criticism of DTC advertising -- including an expected anti-DTC diatribe from Ralph Nader -- attendees at the conference were praised up and down by Mr. Thompson, the HHS secretary from 2001-05.

Equal parts preacher and comedian, Mr. Thompson outlined a health-care system in the U.S. that he said was "in terrible shape." Health-care costs, he said, were $2 trillion, or 16% of the gross domestic product. By 2013, he estimated, the cost will double to $4 trillion and be 20% of the GDP.

Health-care costs in Japan, by comparison, are 7% of that nation's GDP.

"Look at General Motors," Mr. Thompson said. "GM has to spend $1,525 on health care costs [for its employees] for every car it produces. Japan spends about $200. I don't care how good all you are in marketing, you lose $1,300 per car you're going to lose out."

Compliance marketing
Mr. Thompson said that of the $2 trillion spent on health care, 75% to 80% goes for chronic illnesses such as diabetes, obesity and the effects of smoking -- costs that he said would be reduced if drug makers and their agencies did more compliance marketing to both the consumer and the physician that will convince people to stay on their medications.

"We have to find a way to get people to take their prescriptions," he said. "We have to go from a curative health-care system to a preventative system. ... So many people don't take their medication. Can you imagine how much we can save by managing the disease?

"You are the leaders," Mr. Thompson said in appealing to the pharma and agency execs. "You have the ability to change this."

In other news from the conference, DTC spending was flat in 2005 compared to the previous year, hovering right around the $4.1 billion mark. Bob Ehrlich, CEO of conference host, DTC Perspectives, called it a case of "equilibrium marketing."

"Enough new products were introduced to cover brands that were at the end of their life cycle, stopped advertising or went generic," Mr. Ehrlich said.

In-store promotions
If pharma marketers are looking for new outlets in which to advertise, drug stores could be a new option. Gary Norman, exec VP-general manager for Rx Edge, a leading pharmacy-based, DTC-marketing firm, reported in-store promotions are an emerging trend in which drug makers are boosting their emphasis on patient information and education, and shifting from TV to more targeted, measurable media.

The Hoffman Estates, Ill.-based Rx Edge promotes pharmaceutical brands with at-shelf dispensers, counter displays, counter mats and other in-store media at more than 17,000 drug stores.

"Retail pharmacies are attractive, cost-effective and perhaps underutilized outlets for reaching consumers who want to learn about various conditions and treatment options," Mr. Norman said, adding that recent survey data from IMS Health shows the overall return on investment for DTC media campaigns was $2.20 on the dollar, compared with $6.40 for every dollar invested in Rx Edge in-store programs.
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