DTC Drug Marketing Linked to Competition, Market Size

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Direct-to-consumer (DTC) marketing may seem to have taken over the airwaves at certain times of the day, think the  TV broadcast evening news programs. But appearances can be deceiving. According to a Congressional Budget 1111309_pillsOffice study, DTC advertising is not rampant. In fact, it occurs only for specific drug categories and in specific situations.

In one interesting twist, the CBO study revealed that an increasing number of competitors leads to drops in DTC advertising. CBO analysts speculate that a monopoly situation allows marketers to generate demand and then charge what they want to make a profit when a new drug first comes on the market.  Pharma companies also tend to spend heavily in the first year they introduce a new product. After that first year, spending on detailing decreases significantly. But spending on DTC advertising takes longer to drop off because the drug must attract attention. CBO analysts also noted that blockbuster drugs that target large segments of the population, such as consumers with high blood pressure, often have unique marketing plans.

The CBO study covered 2,000 drugs, and of those, between 700–800 had promotional spending. Only 100 drugs were promoted via DTC advertising in any year.  Each significant new drug launch was accompanied by the following marketing profile:

  • DTC $41.8 million
  • Trade journals $1 million
  • Meetings/events $3.6 million

In 2008, marketers spent $20 billion industry-wide on  promotional activity which broke out as follows:

  • Total: $20.5 billion
  • Detailing: $12 billion
  • DTC: $4.7 billion
  • Meetings/events: $3.4 billion
  • Journal ads: $400 million
  • Online ads: $93 million

It’s too soon to predict how marketing might be affected by potential new healthcare legislation. But it’s a safe bet that regulators will look closely at the role marketing expenses play in the cost of drugs.

[Source: Arnold, Matthew, CBO find competition…Medical Marketing & Media, 12.03.09]
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.