Are We Looking at the End of the Golden Era of DTC?

There’s a lot of fuss and bother this week about DTC. First, Congress has two bills that would restrict advertising to at least two years after a new drug launch. Second, two Democratic reps have asked Amgen and J&J to stop advertising their anemia drugs Procrit, Aranesp and Epogen. (Although Internet Drug News points out that one drug isn’t advertised at all and another hasn’t been advertised for two years.) And lastly, J&J cut back on its ad budget by about $250 million last year, moving money out of traditional media and into non-traditional avenues.

J&J is a bellwhether for other companies, or has been in the last few years, because other marketers tend to copy it. And with the choppy waves in Washington it begs the question:

Is this the end for DTC?

Let’s look at the numbers. First, DTC spend was up 14.5% last year according to TNS Media Intelligence, from $4.1 billion to $4.7 billion. So J&J is actually going against the tide of dollars—in reality there’s more money flowing into DTC, not less.

Second, there’s a big difference between bills proposed in Congress and actual laws passed. Restrictions on DTC have been proposed before and have not passed. True, with the Dems in control things may be different this time around. But remember that there’s actually a whole cottage industry of professionals out there whose job it is to keep drug marketers worried about this stuff.

Now let’s compare J&J (where spend on Rx drugs sunk to $81 million from $257 million) with other Big Pharma companies. The first thing to know is that J&J is not alone in pulling back from major media. Spending at these companies also declined last year:

Abbott Labs ($81 million down from $89 million)
Allergan ($79 million down from $114 million)
Barr ($11 million down from $17 million)
Novartis ($186 million down from $221 million)
P&G’s Rx brands ($60 million down from $62 million—even though Ad Age accused P&G of not pulling back from major media)
TAP ($4 million down from $72 million)
Wyeth (71 million down from $78 million).

But before all you ad agency types throw yourselves off a bridge, consider who showed up to the party last year with extra DTC spending.:

GSK ($858 million, up from $707 million—and now the largest spender on the planet)
Pfizer ($557 million up from $425 million)
Merck ($476 million up from $370 million)
Lilly ($203 million up from $159 million)
BMS ($259 million up from $166 million)
Boehringer Ingelheim ($76 million up from just $1.6 million)
AstraZeneca ($438 million up from $418 million)
Sepracor ($297 million up from $215 million)
Sanofi (stayed the same at $242 million)

So what does this mean? As I’ve stated before, it doesn’t mean a lot. The overall level of drug spend is more dependent on companies’ product cycles, new launches, and new money coming from smaller companies than it is on Top 10 Big Pharma spend or what’s happening in Washington.

Even if the bills pass on Congress, it will only take two or three years of spending out of the cycle before the money comes back. And unless The Hill is going to turn its attention away from fired US Attorneys, Iraq and the potentially tanking economy, even that won't happen.

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