NEW YORK (March 24, 2010) — The healthcare reform debate might have essentially ended with Sunday's historic House of Representatives vote for passage of the bill, but the legislation will nonetheless have residual effects for the advertising industry.
You thought the ads for healthcare reform were over? Think again.
The American Federation of State, County and Municipal Employees (AFSCME), which represents more than 1.6 million union workers, has begun airing ads this week in the districts of 14 Democratic members of Congress who voted for healthcare reform but whose seats may be at risk because of that vote come November.
The campaign—a one-week, $1 million TV ad buy also backed by the group Health Care for America Now—is titled “On Our Side.” The ads applaud the members of Congress who were pro-reform against what AFSCME calls “the 2,049 health insurance company lobbyists and the $86 million in misleading ads” that were spent during the healthcare debate.
“All totaled, this is the largest mobilization we've ever done,” Doug Loveless, director of legislation for AFSCME, told Advertising Age, a New York-based sister publication of Tire Business. The union spent $10 million in advertising supporting healthcare reform leading up to Sunday's vote, and made more than 300,000 calls or letters to members of Congress.
“We understand the courage it has taken for these Representatives to stand up to the well-funded insurance industry and its allies and to stand up for everyday Americans,” AFSCME President Gerald W. McEntee said in a statement. “These Representatives were there for us, and we're letting them know that we'll be there for them.”
Despite being on the hook for $85 billion over the next 10 years to help pay for healthcare reform—thanks to a back-room deal between the White House and the Pharmaceutical Research and Manufacturers of America PhRMA—drug companies are one of the big winners here.
With 32 million more Americans set to be covered by health insurance under the new legislation, that means more doctor visits and more prescriptions, which means more money to Big Pharma.
So could the ad industry be a winner as well? Opinions are mixed as to whether the drug makers will turn around and use some of those increased profits from more prescriptions to then increase spending on direct-to-consumer advertising of their products.
“I'd like to think they will,” said one healthcare ad agency president, whose clients include three of the top 10 pharma companies in the world, but who asked to remain anonymous. “We had a little uptick in DTC (direct to consumer) spending last year, so we're hopeful that it continues. But I think the ad industry is even more hopeful that the pharmaceutical companies look at this like it's 30 million new customers.”
DTC spending was indeed up slightly in 2009, rising about 2 percent to $4.5 billion, according to The Nielsen Co.
But Dick O'Brien, executive vice president and director of government relations for the American Association of Advertising Agencies, doesn't believe one thing necessarily leads to the other.
“I don't expect (an increase in DTC spending),” he said. “The soon-to-be-insured are already in the audiences seeing the existing ads.”
Eventual DTC backlash
Of course, there's another reason DTC might not see increases. Quietly, there are a few in the industry, and in the blogosphere, who wonder if the Republicans—who long had an alliance with PhRMA—will try to enact some sort of revenge for PhRMA's strong backing of what was essentially a Democrats' healthcare bill.
The easiest? Try to impose a one- or two-year moratorium on DTC advertising of new drugs.
Most experts don't feel that will happen, but they remain cautious, worrying that either side could eventually make an issue of it again.
“Beware of the many members (of Congress) who will seek follow-up ways to extract further 'concessions' from the industry,” John Kamp, executive director of the Coalition for Healthcare Communication, said in an e-mail reply from Egypt, where he is vacationing.
Mr. Kamp said the drug industry should be less concerned with the Republicans than with the Democrats.
“Watch (Rep.) Henry Waxman (D-Calif.), in particular,” Mr. Kamp said. “He was never part of the PhRMA/White House/Senate deal, never liked it and was clear that he wanted to bust it from the onset. He has a very good memory for past defeats.”
“Will there be hearings on DTC? There are always hearings on DTC,” said Peter Pitts, president of the Center for Medicine in the Public Interest and a former FDA associate commissioner. “But, at the end of the day, it's really a First Amendment issue.”
This report appeared in Crain's Advertising Age.