Drug Companies Cut Back on Ad Spending
In the past few years, you couldn’t turn on the television without seeing an advertisement for some new kind of drug. Erectile dysfunction, blood pressure, allergies, and restless leg syndrome (yes that is real) are all some of the drugs you may have seen splashed boldly in front of you on the screen. If you have been paying close attention, or just spend hours glued to the television, you may have noticed that drug ads have become less and less frequent throughout 2008. What’s causing this ad-less phenomenon, and is just due to the struggling economy?
Drugs Are Denied More Than Approved
Many drug companies are getting many of their fancy new drugs approved by the FDA and other regulatory bodies, so there’s no point in spending money advertising a drug that no doctor is going to buy and prescribe. If drugs are making it past the rigorous approval process, they are often drugs that target smaller population groups, like a cholesterol drug. There is no sense on spending millions on advertising on a drug that won’t be treating millions of people. According to figures from TNS Media Intelligence, U.S. drug ad spending dropped 6% in the first eight months of 2008, to $3.2 billion. That comes after a 3% dip in the full-year 2007, which had a total of $5.3 billion. Ad spending had generally been upward previously, peaking at $5.4 billion in 2006.
A Change in Media
You may not have realized this, but most of the ad spending done by drug companies is in the form of print ads. I don’t read magazines much anymore but when I did, I would see a ton of different drugs being advertised, varying heavily from magazine to magazine and their target audience. As with so many things, the trend now is headed toward the online world. People want their information in an instant, and web advertising can provide that. While you can easily flip through a magazine and read a drug’s information there, it is so much easier for a consumer to have an ad pop up on their screen, click on it and then read all the information they ever wanted to know about a particular drug. It makes complete sense to funnel money into online advertising (but then again, I encourage everyone to get online, whether it’s for fund raising, communication or shopping). Drug giant AstraZeneca told Dow Jones Newswires that some 20% of its consumer marketing budget was for digital advertising this year, up from around 15% in 2007. 1/5 of a company’s marketing budget going toward making sure online consumers get the drug message? It seems smart to me on the part of the drug companies.
A Tarnished Reputation
Drug companies are also feeling more and more cautious about splashing their name and products all over the media, because of the recent backlash about products causing harm in patients and just the general PR snafu that this whole scenario creates. Why take the risk of spending millions on advertising to find out that there has been a problem with your drugs and they have harmed the people you intended to help? How bad does that make the drug companies look? I am definitely not sitting here trying to defend the drug companies or suggest ways for them to protect their reputation. I don’t particularly care for the way drugs are peddled to insurance carriers and doctors, always trying to sell the latest and greatest model and keeping prices high so the doctors have no choice but to charge that much as well. Medicine was intended to help people, and instead padding the pockets of so many drug company big-wigs. But, I digress. The increasingly poor state of the economy is also playing a large part in the decline of ad spending. Drug companies are taking a long hard look (just like the rest of us) at where the money is going and where the fat can be trimmed. I’m sure they have a team of analysts whose job it is to look at spending and how much the ads cost and what they have brought in revenue wise. Ads may be getting the ax simply because they aren’t producing like the companies would hope.
How is this reduction in spending going to affect you? Hopefully, it shouldn’t. If you are looking for new health insurance, you should be able to still find the same medications covered in your plan, even if you aren’t seeing them advertised on television.
Tags: advertising cost, drug companies, health care cost, health insurance, prescription drug ads, prescription drugs
