Insights

The Influence of Direct to Consumer Advertising (DTC)

March 25, 2019

Employee Benefits

We’ve all seen the flood of commercials that show if we have a high cholesterol, poor circulation, or psoriasis, we can just see our doctor who’ll prescribe a pill to make our life better. Is it really that easy? The pharmaceutical industry spends over $6.4 billion annually advertising prescription medications via television, online, and print media. Whether it’s arthritis, diabetes, deep vein thrombosis, metastatic breast cancer, or a host of other ailments, they’re trying to convince you to talk to your doctor about their medication. It’s the number-one type of advertising in America.

The US and New Zealand are the only two countries which allow this practice, known as Direct To Consumer (DTC) advertising. This advertising leads to higher demand by consumers (and employees) which drive up healthcare costs. And who pays for these higher costs? The employer does, as the largest provider of healthcare insurance in the US.

The Evolution of DTC

DTC advertising was first allowed in the 1980s but started gaining momentum in the late 1990s after the FDA eased restrictions on advertising content. Since then, DTC advertising has skyrocketed, growing 62% since 2012, at a time when all other advertising has remained flat.

DTC guidelines paint two different pictures from a regulatory and pharmaceutical viewpoint. The FDA focuses on advertising content and requires all DTC advertising to:

  • Be accurate and not misleading.
  • Reflect balance between harms and benefits.
  • Make claims sponsored by evidence.

However, the Pharmaceutical Research and Manufacturers of America trade group is more consumer-doctor focused and requires DTC ads to:

  • Educate patients about treatment options.
  • Increase awareness about diseases.
  • Motivate patients to consult with their doctors.
  • Increase likelihood that patients will receive appropriate care.

Since drug makers control ad content, they will continue to encourage consumers to learn more about their drugs with the intent of them encouraging their doctors to prescribe their advertised medications.

Isn’t There a Law?

DTC got a bit out of hand in the early 2000s when Richard Jarvik, the inventor of the artificial heart, appeared in an advertisement for Pfizer’s Lipitor, in which he claimed he was “now in the boat with everybody else” who had high cholesterol. It turned out that Richard Jarvik was not a medical doctor and could not prescribe medication, which was the impression that the $260 million ad campaign conveyed. From thereon, ads no longer used actors as doctors and could only include celebrities, doctors, or real people who used the advertised medication.

Since that time, the FDA increased the guidelines for DTC advertising. There must be a “fair balance” between the benefits and side effects of the drug. Savvy marketers have learned to blur the lines by using attractive visuals that amplify the benefits of the drug (making them more memorable) while using text or rapid talk which downplays the benefits.

While the FDA provides advice for DTC advertising, they don’t have stringent guidelines. According to the FDA website, they only see an ad when we, the consumers do, and if there are complaints they will “write a letter.”

Does DTC Advertising Help Consumers?

The pharmaceutical industry contends that DTC advertising raises patient awareness so they can discuss their conditions with their doctor. Pharma advocates say these discussions are a way to avoid expensive hospital stays and surgery, which may drive down healthcare costs.

Consumers may be getting the upper hand when asking for medications that may be right for them. Medical advocates indicate that doctors who do not know all the side effects of drugs are willing to write prescriptions when patients request them to do so. One doctor noted how the medical industry has changed since DTC advertising began. Prior to DTC,

“…there wasn’t this magical belief that there’s a ‘miracle drug’ out there. Doctors and patients were more reasonable. But now it’s changed completely.”

The CEO of Roche, the Swiss pharma company, thinks DTC was the “single worst decision” drug manufacturers ever made, because while it may have increased sales, the practice has done significant harm to Big Pharma’s reputation by opening up drug manufacturers to enormous criticism.

Does DTC Influence Doctors?

DTC goes beyond just advertising to consumers and patients. Pharmaceutical companies have ample budgets to provide medical professionals with everything from speaking opportunities to free lunches. And while these companies must report payments they make to doctors, there is no law that says they can’t influence a doctor’s decisions.

A recent study indicated:

  • Nearly 40% of prescribers received a total of $3.9 million in 2013, including meals, trips, and gifts that ranged from $7 to $200,000.
  • Gift recipients wrote more prescriptions than non-recipients, including for nearly 8% more brand name drugs.
  • Those who received less than $500/year in gifts issued more prescriptions, including more expensive prescriptions.
  • Those prescribers who received more than $500/year had the highest number of prescriptions and the highest average cost per prescription.

How Much Do Doctors Get Paid by Pharma Manufacturers?

Do these payments have an influence on doctors?

A leading registry allows you to investigate payments made to doctors. Pfizer leads all manufacturers (maker of Prevnar products, Eliquis, and Lipitor), paying out over $30 million to doctors. Victoza (Novo Nordisk), a medication for diabetics and Eliquis (Pfizer), a medication for blood clots, have the top payments to doctors at $9 million and $8 million respectively. Pharmaceutical companies are not alone, with medical and surgical device manufactures have high dollar value budgets. Da Vinci Surgical Systems, a leader in robotic surgeries, also tops the list.

CompaniesDrugsDevices
Company NamePaymentsDrug NamePaymentsDevice NamePayments
Pfizer Inc.$30MVictoza$9.07MDa Vinci Surgical System$12.8M
Janssen Pharmaceuticals, Inc.$20.5MEliquis$7.99MHips$9.42M
Astrazeneca Pharmaceuticals LP$19.1MBrilinta$7.71MSpinal Fusion Device$7.25M
Forest Laboratories, Inc.$17.2MInvokana$7.16MSpine$5.84M
Allergan Inc.$15.5MLatuda$7.03MKnees$4.69M
Otsuka America Pharmaceutical, Inc.$15MXarelto$6.93MDelivery System$4.35M
Sanofi and Genzyme Us Companies$14.6MHumira$5.58MVascular$4.31M
AbbVie, Inc.$13.5MTudorza$5.31MDental Implants$3.16M
Genentech, Inc.$12.9MDaliresp$5.2MTrauma & Extremities$2.89M
Intuitive Surgical, Inc.$12.8MAbilify Maintena$5MDental Chair$2.82M
Novo Nordisk Inc.$12.4MAbilify$4.77MThoracolumbar$2.65M
Depuy Synthes Sales Inc.$12MLinzess$4.59MTrauma$2.45M
Bristol Myers Squibb Company$11.9MPradaxa$4.43MAlloderm$2.29M

Source: ProPublica, January 2015, based on  Open Payments data released by the Centers for Medicare and Medicaid Services

What’s Next?

A study compared DTC ads from 2004 to 2016 to see how ads have changed. They found:

  • Portrayals of drugs enhancing lifestyles increased.
  • Drugs that were framed in an emotionally positive way to help people gain control and/or social approval of their conditions increased.
  • Factual information and discussion of causes and risk had decreased.

Drug and device manufacturers have been successful at influencing both consumers and doctors using DTC advertising. As consumers, we must continue to be advocates for our own health and develop objective relationships with trusted medical providers and look beyond the simplified versions of what DTC advertising shows us.

Was this post helpful?

See all articles by Sheila Villaroman

All views expressed in this article are the author’s own and do not necessarily represent the position of Woodruff-Sawyer & Co.

Sheila Villaroman

Senior Vice President, Employee Benefits

Contributor, Employee Benefits

In addition to her specialization in employee benefits, Sheila focuses on complementary solutions that meet clients’ enterprise risk management needs.

415.399.6408

LinkedIn

Sheila Villaroman

Senior Vice President, Employee Benefits

Contributor, Employee Benefits

In addition to her specialization in employee benefits, Sheila focuses on complementary solutions that meet clients’ enterprise risk management needs.

415.399.6408

LinkedIn