AMA Decision on Advertising – May Cause Sweats and Diarrhea

Yesterday, at its interim meeting in Atlanta, members of the American Medical Association (AMA) voted to support a ban on direct-to-consumer advertising. Big news considering that billions are spent each year industrywide (PhRMA, the pharma industry trade group, has already voiced its opposition). AMA membership cited the need to make prescription drugs more affordable as their motivation. Their argument is sound: promoting more expensive therapies diverts demand for perfectly suitable alternatives that cost much less.

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Perhaps the hope is that prescription drugs will go the way of razor blades. Until Michael Dubin introduced us to Dollar Shave Club in a 2012 YouTube video, we just accepted that razor blades – and all that new blade technology – would/should command a perpetual price premium. Gillette has learned the hard way that disruption is a hard pill to swallow. All the advertising in the world couldn’t counteract the truth about blade technology – and today it’s cheaper to shave.

I know that drug discovery and commercialization is much more complex, with upfront investment necessary to bring critical therapies to market, especially those that target only subsets of the population. There’s more to that argument than this short piece can credibly address, but on that front I am more optimistic as I see advances in precision medicine and companion diagnostics and calls for patent reform in what can only be described as an environment of increasing transparency. For now, I’ll put certain drugs – such as novel therapies for rare cancers, in a different class: few ad dollars are spent here anyway.

So where will all the money now spent on ads go? Certainly traditional TV advertising would take a hit – bad timing as the industry continues to wrestle with cord-cutting. Some might hope that so-called digital spending can fill the void: eMarketer predicts “swift growth” for programmatic video ads over the next 24 months. But this is just a different side of the same coin. It’s still advertising.

The AMA vote doesn’t equal regulation, policy or, at least for now, even a guideline. But it is an important inflection point that should have all of us thinking ahead. How can drug companies help patients decide on the best therapies for them? Should hospitals receive “education funds” to communicate treatment options in a clear and unbiased manner? Should the FDA Adverse Event Reporting System (FAERS) database be fashioned into something that’s readily accessible to patients? Should there be an app for that? There may even be some unassailable mechanism for pharma companies to fund independent patient advocacy groups – perhaps a logical next step in the transformation to patient-centric healthcare.

We’re ready for change. If the AMA vote is the proverbial straw, then I’m certain that we can and will find better ways to spend the billions. It’s the prescription for better healthcare, and even if it causes the industry some night sweats and diarrhea, these temporary side effects are well worth it.

Scott Bauman is Greenough’s Executive Vice President. Follow him on twitter: @sbauman