Since the late 1990’s, when FDA released guidelines clarifying the rules for direct-to-consumer (DTC) advertising, such advertising has been an important part of the marketing strategy for newly approved drugs, particularly ones that treat common conditions affecting large patient populations. Lawmakers have been wary of the practice, concerned that it might lead to higher drug prices, or that it might expand the use of a drug for a condition for which it provides little benefit and expose patients to unnecessary risks. In 2007, an Institute of Medicine committee recommended that FDA prohibit manufacturers from advertising to consumers for two years following approval of a new drug. Several bills calling for a moratorium on DTC advertising have been introduced in Congress over the past few years, but none have been adopted.
The Congressional Budget Office released a report this month, analyzing the potential effects of a two-year moratorium on DTC advertising for newly approved drugs. The report notes that in 2008, spending on DTC advertising represented about 25% of total promotional spending on drugs and amounted to $4.7 billion. However, DTC marketing was only used for a subset of drugs, around 20% of those approved between 1999 and 2008. Since 1999, new drug approvals have been steadily diminishing, and in 2008, only 2% of prescriptions filled were for new drugs.
Given the reduced number of new drugs and that few of these are marketed directly to consumers, the report predicts a low impact of a two- year moratorium. Eliminating DTC advertising would likely shift marketing efforts towards physicians and healthcare providers, which would be especially important for brand-name drugs that have close competitors, according to the report. For drugs without close competitors, drug makers might shift their focus to disease-oriented marketing, where a condition is advertised, but no specific mention of a treatment is made. This type of advertising is meant to encourage patients to seek treatment, and can increase sales in cases where there is a clear market leader, or where only a single approved treatment for a condition exists. The report also speculates that a two-year moratorium would simply cause an increase in spending on DTC advertising after the moratorium ends, offsetting any benefits accrued during the first two years.
The effect of a moratorium on drug pricing was difficult to predict, said the report. Drug pricing is heavily influenced by demand. If manufacturers are able to substitute other marketing for DTC advertising, demand might not be significantly affected. According to the report: “Any change in prescription drug prices would depend on changes in demand; to the extent that the effects on demand are likely to be limited, so too are the effects on prices.”
The report concludes by addressing concerns about the effects of DTC advertising on public health. The report speculates that a moratorium would provide more time during which safety issues around a drug can emerge. On the other hand such risks only become apparent after a large number of patients have taken a drug, and so the realization of those risks might be delayed if fewer people know about and take the drug.