Drug Firms' Spending on Consumer Ads Fell 8% in '08, a Rare Marketing Pullback

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Drug makers cut their spending on consumer advertising of prescription drugs by 8% in 2008 to $4.4 billion, the first pullback since at least the late 1990s in their efforts to get patients to request a particular medicine.
Such ads have surged since 1997, when the Food and Drug Administration relaxed restrictions on drug advertising to consumers. U.S. spending on such drug ads hit a peak of $4.8 billion in 2007, according to market researcher IMS Health, up from less than $1 billion in 1997.
Pharmaceutical-ad experts blame last year's spendng decline on fewer new-drug introductions and heightened congressional scrutiny of drug marketing.
Critics say the ads, which are permitted in few other countries, inflate health-care costs by prompting patients to request brand-name medicines, rather than cheaper generic alternatives. The industry's trade group, however, cites a 2003 statement from the Federal Trade Commission that argues that the ads educate consumers about drug options and haven't been shown to lead to higher prices.
In the U.S., ads aimed at consumers typically account for only about 40% of the total marketing budget for prescription drugs, according to the pharmaceutical industry. The majority of manufacturers' promotional efforts are directed at doctors.
The slowdown on the consumer-ad front has already hurt some advertising agencies, including Publicis Groupe SA and Omnicom Group Inc. "Health care continued to slow in the quarter due to a lower number of new-product releases and cuts in spending from the large pharma companies," said Randall Weisenburger, Omnicom's chief financial officer, during a conference call with analysts in February.
Merck & Co. and Schering-Plough Corp., which jointly market the top-selling cholesterol drug Vytorin, sharply cut spending on consumer ads last year to $47 million from $114 million, IMS said. The decline came after two Michigan congressmen, Reps. John Dingell and Bart Stupak, criticized the companies for advertising the drug while allegedly delaying the release of a medical study that found Vytorin was no more effective in some patients than a cheaper alternative.