April 10th, 2007

New Medical-Device Ads; Old Concerns

By Brian Steinberg
The Wall Street Journal

Can a Knee Implant Be Sold This Way, And Should It Be?

Pharmaceutical companies spend billions of dollars on television ads every year, not knowing for sure how many new prescriptions the spots generate. Now a new frontier is opening in health-care advertising that may be even trickier to evaluate: ads for medical devices and procedures.

A raft of ads for everything from hip replacements to radioactive seeds to treat prostate cancer has hit the airwaves over the past couple of years, as companies tap the aging population to boost sales. And like most commercials, the ads don’t pull any punches. A spot that launched in January for Medtronic’s implantable defibrillator, used to revive someone who’s suffered cardiac arrest, promises a longer life for patients. “If you’ve had a heart attack or have heart failure, inside this little device, you just might find 10,000 more kisses, snow, 200 more football wins...”

Or there’s Zimmer Holdings’ ad for its knee replacement, “Gender Solutions Knee,” designed specifically for women. The ad tells viewers they will be “amazed at what a difference a knee replacement can make.”

More device ads are coming, say ad executives. “I think it’s going to definitely grow,” says Michael Guarini, president of WPP Group’s Ogilvy Healthworld, who notes that the device market is becoming increasingly competitive.

To be sure, ad spending on medical devices isn’t likely to become quite as significant as the money poured into pharmaceutical drugs, which more than doubled to $5.3 billion last year from 2000, according to TNS Media Intelligence. The device market is worth about $50 billion in sales right now, estimates Milton Hsu, a medical-devices industry analyst for Bear Stearns, compared with $320 billion for pharmaceuticals. TNS doesn’t break out spending by medical-device makers. Most TV ads for medical devices air in the so-called spot market in limited regions of the country, rather than on national networks where airtime is more costly.

Just as the explosion in drug ads over the past decade prompted questions about the effectiveness and appropriateness of heavy marketing, similar doubts exist about medical-device advertising. As is the case with prescription drugs, patients can’t buy devices on their own—they need a doctor. And in the case of medical devices, a surgeon retains control over the process—which makes consumer advertising an even trickier proposition.

Critics have blamed heavy drug advertising for creating demand for drugs that aren’t necessarily needed. Ads for Merck’s Vioxx were blamed for fueling widespread use of the drug, which was later withdrawn because of safety issues. Some predict similar issues with medical devices. “There are obviously going to be critics about whether or not you are selling to the wrong customer,” says Bear Stearns’ Mr. Hsu.

Some companies that have tried consumer advertising say they are more interested in raising awareness of medical conditions and asking consumers to seek out information than they are in hyping their brand. “Unlike some of the drug advertising that makes the patient call the doctor and demand the drug, this is more about call the doctor, talk about the terms and options, and there’s a product out there, but we’re not the only product,” says Christine Jacobs, president and chief executive of Theragenics, which makes TheraSeed seed implants, used in a procedure to help treat prostate cancer.

The bigger question may be simply whether consumer ads are worth their cost. Many medical-device makers are yet to be convinced, judging by a recent survey by Cutting Edge Information, a Durham, N.C., research consultant to drug and device companies. It found that makers ranked direct-to-consumer campaigns as less effective than marketing to doctors through physician conferences, calls by sales representatives and medical publications.

Still, Medtronic’s campaign shows that device makers are getting past their doubts. The Minneapolis-based company has launched its biggest consumer-ad campaign ever behind its defibrillator. It says it’s too early to gauge the results of the ads, which it notes are just one part of a bigger campaign that also involves training and educational outreach to doctors.

Many of the companies tie TV ads into broader efforts involving public relations and marketing to medical professionals. Zimmer, for instance, talked to surgeons well in advance of the ads’ release, says Sheryl Conley, Zimmer’s chief marketing officer. Prior to running the ads, Zimmer issued news releases and made surgeons and testimonials from patients available to the media, including daytime-talk shows. Zimmer will spend about $8 million on direct-to-consumer advertising between the fall of 2006 and the end of the first half of 2007.

Those companies that do TV advertising watch the results closely. Digene, which makes a test for detecting human papillomavirus, linked to cervical cancer, uses spot TV ads but monitors the number of its tests ordered in a market after its ads run, says Joe Slattery, Digene’s chief financial officer.

“Analysts watch us and watch our spending, and you have to show return right away to the people who support you,” says Pam Rasmussen, who oversees consumer marketing for Digene.

Theragenics has had mixed results with its TV ads. In 2004, it struck a sponsorship deal with Professional Bull Riders, part of an effort to reach men living in middle America, says Ms. Jacobs, the company’s chief executive. Local TV ads ran in markets where PBR events were held and featured some of the bull riders, she says. After switching to sponsoring bass-fishing competitions broadcast on ESPN in 2005, Theragenics has now shifted back to the bull riders, she says, and has winnowed its consumer-marketing budget to $1.6 million from $2.4 million, partly the result of targeting its ads more finely. “I’m going to go direct to consumers as long as I can afford it and it still does get us results,” says Ms. Jacobs.

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