September 21st, 2007
Media Industry Helped Drug Firms Fight Ad Restraints
By Anna Wilde Mathews and Stepanie Kang
Wall Street Journal
When the Democratic-led Congress started debating a big Food and Drug Administration bill earlier this year, pharmaceutical companies worried that it would sharply restrict one of their most powerful sales-boosting tools—drug ads.
But in the final bill, which passed the House overwhelmingly on Wednesday and the Senate last night, such marketing is largely spared. One major reason: the drug industry found powerful allies among media and advertising firms who were determined to protect one of their biggest and fastest-growing advertising categories.
The toughest drug-ad restriction in early drafts of the bill gave the FDA authority to block a drug company from advertising a medication that carried serious safety concerns. That was left on the cutting-room floor. The FDA will get new power to require drug companies to submit TV ads for review before they run, but it can only recommend changes, not require them. The bill lets the agency levy fines for false and misleading ads.
Some are glad drug-advertising rules aren’t headed for a major shift. “The upside is the fact that it’s not changing significantly, because it could have been an ugly picture,” says Mike Rutstein, executive vice president of consumer health care at Interpublic Group PLC’s DraftFCB, which creates ads for companies including Wyeth and Eli Lilly & Co.
It was “a success for the entire advertising community,” says Dan Jaffe, executive vice president of the Association of National Advertisers, a trade group.
Others said they weren’t fully satisfied with the changes. Rep. Frank Pallone, a New Jersey Democrat, said he felt the new FDA authority to fine drug makers for misleading ads and other provisions are “improvements, even if they don’t go as far as I would have liked.”
Consumer drug ads have drawn criticism since a series of serious high-profile drug-safety issues, particularly Merck & Co.’s 2004 withdrawal of Vioxx, a painkiller, featured in high-profile ads, that became a blockbuster.
Critics argued the industry used ads to push new medicines into wide use before their full safety profiles were clear.
In September 2006, the Institute of Medicine, part of the National Academy of Sciences, released a report on drug safety, commissioned by the FDA, which said the agency should have the power to impose a moratorium on consumer ads for a drug that raised safety issues. Key House and Senate lawmakers introduced FDA bills that contained the advertising moratorium.
“All we have to do is look back at the Vioxx situation to learn the danger of direct-to-consumer ads,” said Rep. Henry Waxman, a California Democrat who backed the moratorium idea.
The drug industry wasn’t pleased, but had other priorities in the massive bill, which increases the FDA’s authority in other areas, giving the agency the power to impose distribution restrictions or force label changes if a drug raises safety concerns.
Also, some drug companies don’t do much consumer marketing, and a number of pharmaceutical makers decided that advertising wouldn’t be a major focus as they tackled the bill.
Instead, lobbying groups including the National Association of Broadcasters and the Advertising Coalition, which represents a broad spectrum of media interests and advertisers, swung into action. For some in that industry, the idea that regulators would be able to block ads about a new drug was a business disaster in the making.
In the U.S., pharmaceuticals were the tenth biggest advertiser in 2006, spending $5.3 billion, or 3.5% of the total $149.6 billion U.S. ad market. Pharmaceuticals also registered the highest growth rate among the top 10 U.S. advertisers, growing 13.8% to $5.3 billion from $4.6 billion in 2006.
Advertising and media firms also feared Congress might later try to enact such restrictions on other types of ads. “People just looked and they were incredulous,” says Harry Sweeney, chairman of Dorland Global Corp., a health marketing and communications firm that is a unit of Huntsworth PLC. “You’re getting into a very slippery-slope area.”
The lobby solicited letters from legal scholars and groups across the political spectrum testifying that the moratorium would violate the First Amendment and would likely be struck down by courts.
Another argument: drug ads are an important source of information for consumers. “Consumers have a right to know what’s out there,” says Sander A. Flaum, managing partner at Flaum Partners, a marketing and consulting firm for pharmaceutical companies.
The messages were conveyed through a campaign of visits, letters and calls to key lawmakers from advertising firms and broadcasters, as well as other media companies. Many members of Congress heard from media interests in their home districts, according to lobbyists and congressional staffers.
In the Senate, Kansas Republican Pat Roberts fought against the moratorium and won when his amendment was added to the bill. In the House, a subcommittee voted to kill the moratorium by adopting an amendment co-sponsored by Democratic Rep. Edolphus Towns of New York.
“We view the entire thing as a First Amendment issue,” says Rick Blake, a staffer for Mr. Towns, who says his office heard from some media interests including the Advertising Coalition.
Mr. Towns’s amendment granted the FDA the power to impose fines on a drug company if its ads were found false and misleading. Currently, the agency must get a court to approve such penalties.
The fines will amount to $250,000 for the first violation in any three-year period, and won’t go above $500,000 for any subsequent violation in a three-year period.
Democrats say the bill will still have an effect on drug ads, reining in the most troubling practices. Besides the FDA’s new power to review ads and fine misleading ones, they point out that the agency will be able to require that ads disclose specific safety risks. With newer drugs, the agency can ensure that ads disclose the date the product won FDA approval. Television and radio ads will also have to include “clear, conspicuous and neutral” statements about any side effects.
Drug companies said they were pleased with the final language. “Many thought this was the moment ... when moratoriums and other restrictions on DTC would flourish,” says Rich Buckley, vice president of federal government affairs at AstraZeneca PLC. Instead, he says, consumer drug marketing “is here to stay.”