A “new” study published in the NEJM concluded that “spending on direct-to-consumer [DTC] advertising has continued to increase recently in absolute terms and as a percentage of pharmaceutical sales in spite of pressure on manufacturers to curtail such advertising” (See “A Decade of Direct-to-Consumer Advertising of Prescription Drugs“).
[In the interest of furthering “medical science,” no subscription is required to access the full text of this article. However, if you want to read up on “A Genetic Risk Factor for Periodic Limb Movements in Sleep,” you’ll have to pay a fee. Sorry, GSK!]
This study has already been covered by several bloggers. So, instead of rehashing everything someone else thought important, I’ll merely quote a couple of pundits and then add something new (ie, more data and a prediction):
Ed Silverman over at Pharmalot pointed out that “Ultimately, the study authors offered a tepid and rather obvious conclusion: ‘Spending on direct-to-consumer advertising has continued to increase in recent years in spite of the criticisms leveled against it. Our findings suggest that calls for a moratorium on such advertising for new drugs would represent a dramatic departure from current practices.'”
That’s one reason for the “Duh!” in the title of this post. Another is a reaction to a post made by “Insider” at PharmaGossip entitled “DTC – an advertising tsunami“:
“An eyebrow-raising report from the NEJM reveals that spending growth in direct-to-consumer advertising by US drug companies has entered exponential mode…Growth in DTC activity over the ten year period has averaged 14% per year and will this year hit $4.2 billion (€3.12bn; £2.11bn).”
Actually, the growth in DTC ad spending averaged 14.2% from years 2002 to 2005, not over the entire 10-year period. [Check the facts as presented in the NEJM article.] NOTE: The rate of “increase” in DTC spending between 1997 and 2005 ranges from -3.7% (a decrease!) to 38.9%. It is quite easy, therefore, to cherry pick whatever % increase between those extremes that fits the purpose.
The NEJM authors seem surprised that DTC ad spending would rise at such a rate DESPITE criticisms and pressure on pharma to reduce spending. I say the spending increased precisely BECAUSE of this pressure, especially from Congress.
Pharma marketers have always lived by the rule “spend it or lose it.” In the current political climate, the rule is “spend it while you can.”
In fact, back in March, 2007, I suggested that “the drug industry is on a spending spree in anticipation of the spending drought to come,” by which I meant a moratorium on DTC imposed by Congress (see “Spend, Spend, Spend Before the End, End, End“).
Now that the threat of a DTC moratorium has faded and drug companies are laying people off and cutting back on their budgets, the rate of increase in DTC ad spending is likely to decrease. That is, I predict that you won’t see a 14.2% in DTC spending this year vs. last year.
What’s interesting, however, is DTC spending may soon surpass DTPhysician promo spending (detailing + journal advertising), perhaps as soon as 2011 or 2012 (see chart below).
To create this chart, I used the same numbers that the NEJM authors used (which come from a GAO report, which picked up the numbers from IMS et al).
I use 11.5% as the average rate of increase in DTC spending — this is the average rate from 2000 through 2005; the NEJM authors obviously wanted a higher number and that’s why they threw out the “lean” years of 2001 and 2002; the near future also promises to be lean and, therefore, I believe 14.2% is too high a number to use for predictive purposes; it’s fine, however, for the political purposes of the NEJM!.
I also have adjusted the GAO numbers and used different figures for DTC spending in 2005 and 2006. Whereas the GAO uses $4.2 billion for 2005, I use $4.89 billion. This is based on numbers reported in Med Ad News Advance (May 2007), which states “Direct-to-consumer expenditure for pharmaceutical advertising totaled $5.61 billion during 2006, a 15.4% increase compared to 2005.” Then, I plugged in the $5.61 billion number for 2006 and projected out from there based on an 11.5% increase per year. For the increase in DTPhysician spending, I used 5.42% as the average annual increase between 2000 and 2005 (based on the GAO report).