Friday, October 21, 2005

Under Scrutiny, Drug Makers Rethink Ad Campaigns

Under Scrutiny, Drug Makers Rethink Ad Campaigns

Marilyn MuchFri Oct 21, 7:00 PM ET

TV viewers can pretty much count on a daily dose of ads plugging the latest blockbuster drugs.

Drug makers spend big bucks promoting their products in broadcast and print media. And they've really opened their wallets in the past two years.

In 2004, the industry poured $4.1 billion into U.S. advertising of prescription drugs, up 26.8% from 2003, says market researcher TNS Media Intelligence. That's on top of a 24.3% rise in 2003.

But these days growth has stalled. From January through July, industry spending on ads slipped 1.5% to $2.34 billion.

The slowdown comes amid a changing industry landscape. That in turn has prompted a change in ad strategies and spending patterns.

"There's been an evolving conversation in many quarters about the value of direct-to-consumer advertising, how you measure it and what should and should not be allowed (in the ads)," said Michael Guarini, managing director of the health care practice of ad agency Ogilvy & Mather.

Lately the industry has faced closer scrutiny of its ad programs.

One culprit is Merck's (NYSE:MRK - News) heavily advertised painkiller Vioxx. Merck pulled it from the market last September after a study showed that long-term use boosts the risk of heart attacks. In the lawsuits that soon followed, plaintiffs pointed accusing fingers at the advertising.

The industry has also come under fire for its reliance on TV ads.

Critics charge that a 30-second TV spot can't convey all the side effects, risks and benefits of a drug, says Dr. Amit Dhawan, assistant medical director of drug marketing consultant Mattson Jack Group.

In August the Pharmaceutical Research and Manufacturers of America answered by issuing 15 "guiding principles" on direct-to-consumer drug ads. The standards are voluntary and take effect in January.

The rules urge firms to submit TV spots to the Food and Drug Administration (FDA) before broadcast. They also advise that ads present risk and safety information in clear, simple language.

The industry could see more new rules in the future. The FDA will hold public hearings on direct-to-consumer prescription ads on Nov. 1 and 2.

"These hearings are part of an extensive review on how the agency handles drug advertising," said Laura Alvey, an FDA spokeswoman. "It could be a first step toward a formal process for setting new regulations. But it doesn't necessarily mean we're going to draft new rules."

All this will prompt players to tweak their consumer ad strategies.

Some firms have already mapped out their plans. For instance, Eli Lilly (NYSE:LLY - News) will limit ads for its erectile dysfunction drug, Cialis, to programs younger audiences likely won't watch.

Pfizer (NYSE:PFE - News) will provide use, risk and benefit information in all TV and print ads.

Drug marketers will likely shift some of their emphasis to disease-awareness and help-seeking messages, says Ogilvy's Guarini. These ads will not tout a specific product or brand, but will focus on the overall disease or condition, he says.

Merck, for one, is using this approach. It's running campaigns to inform patients about ailments such as diabetes and heart disease and their attendant risks, says Merck spokesman Christopher Loder.

Another change: "We'll probably see a more discreet use of broadcast," said Guarini. "That's not to say the dollars devoted to broadcast will disappear or decline dramatically. But they'll be more selective about how they use broadcast."

Judging from recent numbers, that trend has already started. From January through July, prescription drug ad spending on network TV fell 6.7% from last year, while cable TV posted a 30.4% gain, says TNS. Spending on ads in local magazines leapt 88.3% and rose 28.3% in national newspapers.

Why is broadcast out of favor? As consumer drug marketing has matured and evolved, we're seeing programs use more of a mix of media, says Guarini.

Advertising on network TV is costing more and more, he adds. Cable also offers more opportunities, including more networks and new and original programming.

Cable also lets drug firms and their agencies develop response-driven ads where consumers can call a toll-free number or go to a Web site for more info. This lets consumers get more involved in the health care process.

Drug makers might also create more personal, direct interaction with consumers, says Richard Martin, president of the Mattson Jack Group. They can use disease associations and other mechanisms that let the patient register for ongoing health care information.

Over time, the Internet will play a greater role in getting the word out about diseases and treatments, he adds.

Drug firms will likely focus their branding strategies more on professionals, says Kelly O'Keefe, chief executive of a brand strategy consulting firm that bears his name.

"You'll see more dollars spent in areas other than broadcast TV," he said. "I think you'll see print holds its place in the pharmaceutical ad market better than broadcast because they can more adequately disclaim the product (in print)."

Print ads have more room for detailed warnings.

He also expects changes in ad content. You're likely to see more authenticity in claims, more straightforward and careful wording, he adds.

"The fizzle and flash are likely to go away," he said.

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