what goes into the cost of prescription drugs

TheRubins.com

Prescription Drugs and the Cost of Advertising Them-Part I

Please also see: Research and Marketing of Drugs: a Challenge-Part II

(2/27/05)- We will continue to point out situations where the FDA
warns a drug company about a misleading promotion, only to see that
the promotion has been long withdrawn from the market. The reason why
we will continue to do this, is because we hope that a more meaningful
penalty, other than a slap on the wrist will be imposed on these
companies that illegally puff their products.

The FDA has sent a letter to Centocor Inc., a subsidiary of Johnson &
Johnson, asserting that its promotional material for the drug Remicade
was misleading. The FDA letter asserted that a pamphlet that the
company's sales representatives used in marketing the drug to
physicians was misleading because it "contained unsubstantiated
effectiveness claims and omits risks associated with Remicade in the
treatment of rheumatoid arthritis,"

Michael Parks, a spokesman for Centocor said the material hasn't been
used since October.

(1/24/05)- All too frequently we see the situation where the FDA warns
a drug company about one of its ads, only to hear that the ad is no
longer appearing, so that the drug company can not be penalized for
its action. In the latest case of this happening, the FDA has warned
Pfizer Inc. about problems with some ads for the pain killing drugs
Bextra and Celebrex.

The FDA letter dated January 10, said five of the ads for the drugs
failed to include important information about their risks and made
misleading or "unsubstantiated effectiveness claims". The ads included
a 15-second Celebrex commercial featuring a woman playing a guitar,
and a 27-minute infomercial about Celebrex and Bextra.

A Pfizer company spokesman said the Celebrex ads cited by the FDA were
no longer running. She had no comment on the other material. It seems
clear to us that some penalty has to be imposed on the drug companies
for violating the law even though the commercial in question is no
longer being actively used.

(1/6/05)-According to Verispan, a health-information company, drug
companies spent about $8 billion on "detailing" to office based
physicians for the 12 month period of time ended October 2004..
"Detailing" involves dropping off free samples at the doctor's office
by the drug companies sales people, while at the same time trying to
educate the doctors and their staff as to the advantages of the
product. That is more than double the increase from 1996 when Verispan
estimated that the drug companies spent about $3.6 billion in
"detailing".

Verspan estimated that Pfizer spend about $406.3 million in
direct-to-consumer ads for Celebrex from 1999 to 2003, while Merck
spent about $459.8 million during that same period of time in doing
the same for its drug Vioxx, which it recently removed from the
market.

(12/26/04)- Since September, the FDA has sent out nine letters warning
companies about false promotions. In a recent matter involving
AstraZeneca and its ads for its cholesterol lowering drug Crestor, the
letter called the ads for the drug "false and misleading", and also
accused the company of misrepresenting the agency's opinion in the ad.

The ads in question included the statement that "the FDA has
confidence in the safety and efficacy of Crestor", and also stated the
"(the agency) had publicly confirmed that Crestor is safe and
effective." Neither of these statements was true. This case shows that
in merely slapping a company on the wrist for its misdeeds, the agency
has little power to truly punish the wrongdoers in these matters
involving false ads.

AstraZeneca began the ads shortly after November 18th, when Dr. David
J. Graham, a safety official at the agency, testified before Senator
Chuck Grassley's committee that Crestor was one of five approved drugs
that he felt were unsafe. Astra began the campaign to counteract this
testimony, and in fact succeeded in halting the decline in the sale of
Crestor.

One of the problems is however that these letters come too late since
the damage has already been done. Astra had already stopped showing
the ads when it received the letter. No penalty is enforced against
the company, so there is nothing to stop them from doing it again. In
this particular case top FDA officials were widely quoted as
expressing their concern as to the safety of Crestor. Public Citizen,
a health advocacy group, has in fact called for the withdrawal of the
drug.

According to an analysis by Public Citizen there were 29 reports of
kidney failure or insufficiency among patients given Crestor in the
first year of its approval in the U.S. This was 75 times greater than
the rate of kidney failure or insufficiency for all other similar
drugs combined. Astra has responded that the drug may actually improve
kidney function.

Dr. Christine Hemler Smith wrote the FDA letter, which stated, "This
claim is misleading because it minimizes the risks associated with the
40-mg dose of Crestor." Astra has agreed to reserve the 40-mg dose for
those patients who failed to lower their cholesterol with a 20-mg
dose.

The FDA has approved a new sleeping pill, Lunesta (eszopicione,
Sepracor). The manufacturer expects to spend at least $60 million next
year to advertise this pill.

(12/23/04)- President Bush has nominated Michael O. Leavitt, the
former three-time governor of Utah, and the present head of the EPA to
replace Mr. Thompson as secretary of health and human services.

Departing Representative Billy Tauzin (Rep.-La.), a onetime Democrat
who became a Republican in 1995, will become president of the
Pharmaceutical Research and Manufacturers of America (PhRMA). PhRMA is
the retail trade-lobbying arm for the pharmaceutical industry. Mr.
Tauzin was a major force in the passage of the Prescription Drug Law
that was enacted on December 8, 2003. This is the law that established
the Medicare prescription drug discount cards program, and the
prescription drug insurance law that begins on January 1, 2006. Mr.
Tauzin headed the House Energy and Commerce Committee until he stepped
down in January because of his bout with intestinal cancer. His son
Billy recently lost an election to replace him in Louisiana.

The 61-year old Mr. Tauzin will replace Alan Holmer in January 2005 at
an estimated salary of $2 million a year. Under present rules of
ethics in Congress he will be barred from lobbying members of Congress
for one-year, but he is free to lobby the administration and Medicare
officials. He can make campaign contributions to members of Congress
and can interact with them socially. In January he turned down an
offer to succeed Jack Valenti as president of the Motion Picture
Association of America. Dan Glickman, a House member from 1977 to 1995
took the job.

(11/6/04)- Former secretary of health and human services Tommy G.
Thompson told an audience of medical professionals in 2001that there
is no reason why they should be prescribing Nexium, AstraZenca's next
generation of drug to Prilosec for acid reflux. Both drugs are very
chemically similar. The patent for Prilosec had expired so the drug
became available as on over-the-counter medication at a cost nowadays
of about $40 per month. Here it is 3 years later and mainly because of
an advertising campaign for Nexium that cost $257 million in 2003,
according to the research firm of Nielsen Monitor-Plus, the drug is
the 7th best selling prescription drug in this country. Its sales were
$3.1 billion in this country last year and it continues to grow this
year. It is estimated that the drug industry spent over $3.8 billion
on advertising last year.

The FDA is studying a proposal aimed at loosening the restrictions as
to what has to be included and how it is worded in drug
advertisements. The change would permit the print ads to be more
reader friendly while concentrating on the most common side effects
which would be highlighted in larger type than the present case of
very tiny type being used to tell about the negative side effects.

(10/8/2004)-On September 17, 2001 the FDA sent a warning letter to
Merck & Co. saying "in a promotional campaign for Vioxx that minimizes
the potentially cardiovascular findings that were observed" in a
clinical trial comparing Vioxx to naproxen, a much cheaper painkiller.
The letter went on to allege that the promotional campaign failed to
inform the consumer that Vioxx had a four-to-five times increased risk
for heart attacks than did users of naproxen.

The reason why we point out this example of a warning letter to a drug
company involves the issue of promotion of an expensive brand name
drug as compared to the non-advertising of cheaper alternative
medicines that may be just as beneficial to the consumer. Keep in mind
the drug companies spend hundreds of millions of dollars to advertise
their products to the consumer. Keep in mind also that the rest of the
western world does not allow its drug companies to advertise their
products directly to the consumer. Generic companies do not as a rule
advertise their products since they constantly are striving to keep
their costs down.

It wasn't until the federal government passed legislation in 1997 that
legalized advertising by the drug companies directly to the consumer.
Before the enactment of this law the drug companies had to advertise
in medical journals only. Over the ensuing years, as we have written
about in this article, the drug companies have consistently increased
their budgets for advertising at a far larger percentage than they
have for new discoveries.

With the costs for our drugs rising much faster than the rate of
inflation, isn't it time for us to go back to revisit this law? Is the
"informed consumer" is better off today, or were they better off when
the advertising could only be done directly to the medical
professionals? We also ask what part can modern technology and the Web
play in this issue? We would like to hear from our viewers on this
matter.

The pharmaceutical industry continues to increase the amount of money
it is spending to advertise their products. Ad spending on
prescription drugs rose 24% last year to $3.2 billion, according to
TMS Media Intelligence/CMR. There seems to be no let up in sight since
the first half of 2004 saw an increase of 30% over a comparable period
in 2003.

Pfizer Inc. announced that it had retained the William Morris Agency
to come up with entertainment-marketing ideas, including embedding
Pfizer products in movies and television programs. Please keep in mind
that the 1997 law that allowed direct-to-consumer advertising requires
that the negative side effect of the drug be included in the ads.

Pfizer Inc. announced that it would shift its ad agency in connection
with a new advertising campaign for its erectile dysfunction drug
Viagra. Spending for the campaign is expected to hit the $100 million
mark this year as the company tries to head off the inroads that have
been made by Levitra (Bayer Corp. and GlaxoSmithKline) and Cialis (Eli
Lilly & Co. and Icos Corporation).

Sales for drugs dealing with erectile dysfunction hit the $2
billion-a-year category this year. Originally Viagra had the field to
itself, but it is now estimated that Cialis accounts for about 19% of
the sales and Levitra accounts for about 14% of the sales. The shift
of ad agencies in the promotion of Viagra meant that McCann Erickson
Worldwide in New York gained the assignment from Cline Davis & Mann in
New York.

When a drug company spends over $100 million on an ad campaign for one
of its drugs, we are all too painfully reminded that
direct-to-consumer ads are taking an inordinate amount of the
pharmaceutical companies spending on matters totally unrelated to
research and development of new drugs.

The FDA has sent an "untitled" letter to GlaxoSmithKline requesting
that the company stop using a TV ad for Paxil Controlled Release its
anxiety treatment drug. The letter stated that the ad was "false or
misleading" because it suggested that the drug could be used by a
broader range of patients than it was actually approved for. The ad
also implied that the drug was safer than actually demonstrated. An
"untitled" letter from the FDA difers from a "warning" letter in that
the penalty for the violation is less odorous.

The impression on the public as a result of the ad is hard to change.
Although the company was given until June 23 to respond to the letter,
it had already stopped using the ad on May 9. The company said it
would not run the ad again. Glaxo stated that the FDA had approved the
ad before the company ran it on TV, but the agency said that this was
not so.

The Bush administrations' promotion of the new Medicare law is a
violation of the law that prohibits the usage of public funds for
propaganda purposes according to a report by the General Accounting
Office (GAO). The videos appeared as if they were news releases, when
in fact they were actually ads to accentuate the positives of the new
law.

The materials were in English and Spanish and were produced by the
Health and Human Services, the agency that oversees Medicare. The GAO
report said that the videos did not identify inform the viewers that
the source was the government. The viewing audience does not know that
the actors were also being paid by the government and were not
independent news reporters.

Senator Frank Lautenber (D.-N.J.), who requested the GAO inquiry, said
that President Bush's re-election campaign should repay the government
for the cost of the videos which was about $43,000. He said that he
would introduce legislation in Congress to force the repayment.

In another sign of the continued crackdown on the illegal promotion of
off-label usage of drugs by the pharmaceutical companies, the U.S.
Attorney in Boston, Michael Sullivan and all 50 states attorneys
general announced the negotiation of a settlement against Pfizer Inc.
for the promotion of its drug Neurontin. The pharmaceutical giant
agreed to pay $430 million in both civil and criminal penalties to
resolve the matter. Thus the Justice Department in addition to the FDA
has entered into this legal battle in connection with promoting
off-label uses for drugs.

A petition has been filed with the FDA,by a personal-injury law firm,
Finkelstein & Partners (Newburgh N.Y.), asking that the agency act on
claims that the drug may be tied to suicidal behavior. The law firm
has filed three lawsuits against Pfizer on behalf of people who
committed suicide or attempted it while on the drug.

The petition is based on the agency own adverse-event reporting
database, and it asks that the FDA require the company to add a
suicide risk item on its label for Neurontin. According to the
petition, the number of suicides reported by Pfizer to the FDA jumped
to 17 in the first 6 months of 2003 compared with a total of 8
reported in 2002. In a statement, Pfizer said it remains "confident of
the safety and effectiveness of this product".

Earlier efforts by the FDA to crack down on off-label advertising were
hamstrung by court decisions holding that certain types of drug
promotions were protected by the First Amendment. Once the FDA has
approved a drug, doctors are free to use the drug for other ailments
also, but it is illegal for the pharmaceutical company to promote the
possible additional unapproved usages.

The penalty was assessed against Warner-Lambert, since all the
activities in question occurred between 1994 and 2000, which was
before Pfizer acquired Warner in late 2000. The violations came to
light as a result of a whistle-blower suit brought by Dr. David
P.Franklin in 1996 who was a medical advisor to the Warner-Lambert,
Parke-Davis sales staff. Dr. Franklin filed his suit under a Civil-War
era whistle blower statue that allows private individuals to sue on
behalf of the government. Dr. Franklin is now a marketing executive
with Boston Scientific, a medical device manufacturer.

Warner-Lambert agreed to plead guilty to two counts of violating the
Food, Drug and Cosmetic Act and pay a $240 million criminal fine. It
will also pay $83.6 million in civil damages for losses suffered by
Medicaid and $68.4 million to settle civil liabilities for the losses
to state Medicaid programs. Thirty eight million dollars will go
toward educating the consumers and doctors about the potential hazards
of off-label usage of drugs. Dr. Franklin will receive $26.6 million
as his part of the settlement.

Pfizer has also agreed to sign a "corporate integrity" agreement that
allows for monitoring of its marketing practices. Neurontin was
originally approved by the FDA for epilepsy and later for a
shingles-related condition. Last year Neurontin brought in $2.7
billion in sales to Pfizer of which 90% was for off-label purposes.
The basic patent for Neurontin expired a decade ago, but Pfizer
asserts that other patents including one related to manufacturing
protect Neurontin. It is expected that some generic versions of
Neurontin will be on the market in late 2004 if the Pfizer patent
extension claim is denied.

Pfizer has a successor to Neurontin called Lyrica, or pregabalin
waiting in the wings. After delays during animal testing and
subsequent human trials Pfizer applied to the FDA for approval to sell
the drug in October of 2003. The Lyrica application simultaneously
seeks approval of the drug for the treatment epilepsy, neuropathic
pain and generalized anxiety disorder. The company filed for approval
of the drug in Europe also and expects to gain that approval some time
in the month of June 2004.

The drug manufacturing companies in Europe are attempting to change
the law over there, so that direct-to-consumer advertising would
become legal, just as the law was changed in this country in 1997. As
a first step in this process, the European Commission is considering
allowing pharmaceutical companies to work together with governmental
regulators and patient groups to disseminate basic drug information.

"We don't want to impose a massive cultural shift in one swoop, said
Scott Ratzan, a physician and vice-president of government affairs for
Johnson & Johnson. He is chairman of an industry task force lobbying
for the change. The European Commission acknowledges that patients
need more information about the various drugs which are now available
to them through the Web, but also realizes that the drug companies
spent over $2.6 billion on advertising these drugs in the U.S.
according to IMS Health, the health-consulting firm.

A new television ad, sponsored by AARP is aimed at legalizing the
importation of prescription drugs from Canada. The ad shows a couple
watching a news program about the war against cocaine and other
illegal drugs. A voice says: "another drug war-the fight for
affordable prescription drugs" by pushing to "legalize the safe
importation of drugs from Canada." The ad closes with the comment:
"It's a drug war we can win."

Pfizer Inc. has launched its first advertising campaign aimed at
directly comparing the benefits of its migraine headache medication
Relpax against GlaxoSmithKline's Imitrex. Pfizer plans to spend about
$20 million advertising Relpax, for which it had spent very little
money on any advertising campaign for up till now.

In the print ad there is a line that states: "Clinical studies prove
that with Relpax, more people get relief with just one dose than those
taking Imitrex." Imitrex had about $1.2 billion in sales last year
versus Relpax's sales of $43 million in 2003 according to NDCHealth, a
health-care-information provider. Imitrex spent about $70 million on
its advertising budget in 2003.

Ad spending by prescription drug companies grew by 21% last year to
$3.43 billion, and with comparative product ad spending just beginning
to emerge, this figure will soar even more. Pfizer said that this was
the first time that it will use a superiority claim against a rival
product in consumer ads. According to Dorothy Wetzel, Pfizer's
vice-president of consumer marketing for U.S. pharmaceuticals: "We
have to give consumers a reason to talk to their doctors about the
drugs."

In order to make such comparative claims companies must conduct two
head-to-head clinical trials that yield meaningful clinical results.
This will of course lead to increase expenditures by the drug
companies. That in turn means even higher drug costs down the road for
all of us.

Eli Lilly & Co. said that the U.S. Attorney in Philadelphia has
launched a civil investigation into its marketing and promotional
practices. Lilly said the products likely to be involved in the
investigation include the osteoporosis drug Evista and the mental
health drugs Prozac and Zyprexa. This is in addition to the Justice
Department's subpoena to the company in July 2002 concerning the
marketing and promotional practices for Evista from the Office of
Consumer Litigation.

Total advertising spending in the U.S. rose 6.1% to $128.3 billion in
2003 according to TNS Media Intelligence/CMR, a New York research firm
that tracks ad spending in 14 media platforms. The greatest percentage
increase took place in Internet advertising where the increase was
15.7% from 2002 to 2003. One of the areas of smallest percentage
increases was in network TV, where the increase was only 1.8% from
2002 to 2003.

Outlays for ads on cable TV rose 15.6% to $12.3 billion in 2003. For
the Spanish-language network TV rose 12.8% to $2.2 billion last year.
It is the need to reach niche markets that is causing the biggest
jumps for advertising dollars. Again according to TNS Media,
advertising on the Internet rose to $6.5 billion last year. Local
newspapers saw their share of advertising revenues increase by 13.4%
to $22.8 billion in 2003.

The U.S. Supreme Court in a 5-4 decision upheld a federal district
court's decision that upheld the right of pharmacists, who sell
so-called drug compounds to advertise this specialty. Compounding is
often needed to create a specialized drug for an individual patient
who may be allergic to an ingredient in a mass-produced drug. Thus the
pharmacist must mix ingredients form different drugs to create the
specialized medication.

Under the Food and Drug Administration Modernization Act of 1997,
pharmacists or physicians were denied the right to advertise the fact
that they specialized in the compounding of certain drugs. The U.S.
Court of Appeals for the Ninth Circuit in San Francisco upheld the
right of the compounders to advertise their skills. Judge Cynthia
Holcomb Hall wrote "compounding is not only legal under state law, but
most states require their pharmacists to know how to compound." The
government argued in the case that they were trying to protect the
public by "preventing wide spread distribution of compounded drugs."

Justice Sandra Day O'Connor wrote the majority opinion in the case,
Thompson v. Western States Medical Center, No.01-344. The case had
been brought by eight licensed pharmacies, each of which specialized
in compounding particular types of drugs. Justice O'Connor stated: "
If the First Amendment means anything, it means that regulating speech
must be a last-not first-resort. Yet here it seems to have been the
first strategy the government thought to try."

Direct-to-consumer advertising is becoming a bigger and bigger element
in the sales growth of the drug companies. Because of the dearth of
new products introduced by the drug companies over the last few years,
coupled with the loss of patent protection for many of the blockbuster
drugs, this will continue to be true for the next few years. According
to Robert Ehrlich, a consultant and founder of DTC Perspectives, a
trade magazine, spending on such ads "pays back from $1.30 to $4 and
change per dollar invested."

The FDA has announced three new proposals in regards to consumer
advertising and the health industry. One of the proposals dealt
directly with the matter of direct-to-consumer ads, which first became
legal in 1997. The proposal would require that all direct-to-consumer
ads for prescription drugs contain language that the consumers can
understand better. It would also require that the adverse reactions be
printed in larger type.

Under the proposal, drug companies would not have to print all the
technical details that come from a drug's label for physicians. The
new proposal urges the drug companies not to use "technical,
scientific terms or jargon." The ads would have to contain all of the
warnings, contra-indications and major precautions. The ads would
require the listing of only between 3 and 5 of the less serious
adverse reactions that happen to people who use the drugs.

The second proposal dealt with ads that educate consumers about
diseases and health problems without promoting a particular drug. The
third proposal dealt with ads for medical devices.

Meredith Rosenthal at the Harvard School of Public Health reported in
The New England Journal of Medicine that the pharmaceutical industry
spent roughly $15.7 billion to market its drugs in 2003. Of that
amount about $4.8 billion was dedicated to detailing individual
physicians. Studies have shown that on average physicians meet with
pharmaceutical representatives about four times a month.

The FDA announced that it would propose changes to its guidelines
governing direct-to-consumer drug ads within the next month. Analysts
think that these changes would involve a reduction in wording, and
change in the format for adverse side reactions that are required in
print media ads. In all likelihood a boxed summary of side effects
would have to be included in print media ads instead of the extensive
wording for adverse side reactions that the regulations now require.

According to the latest statistics available from TNS/Media
Intelligence/CMR, part of Taylor Nelson Sofres, which covers the year
2002, the drug industry spent $2.4 billion on print media ads. Because
of the lack of truly new medications that are due to come to market in
2004, most of the drug companies have indicated that they intend to
increase their spending for ads, so that they can increase their sales
for their existing drugs. It may even reach the point where you will
see generic drug companies doing direct-to-consumer ads for some of
their better selling products.

Google announced that it would stop running ads from Internet
pharmacies that sell prescription drugs in violation of the U.S. drug
laws. Thus Google became the third of the major search engines to stop
taking such ads. It joins Microsoft Corp.'s MSN and Yahoo in cracking
down on the ads from online drug companies. With the passage of the
new drug law by Congress, this in effect means that they will not
accept ads from any overseas pharmacy except from those licensed in
Canada. The law allows only the re-importation of drugs from Canada if
the Secretary of Health and Human Services attests to the safety of
the drug. Secretary Tommy Thompson has already announce that he would
not be willing to make such an attestation at this point

Novartis, the Swiss drug maker has announced that it intends to
increase it advertising budget to promote more of its new and already
existing drugs through direct-to-consumer advertisements. Novartis has
introduced 11 drugs, which is more than any other drug company since
2000. Its biggest selling drug is Diovan, a blood pressure pill that
competes with Merck's Cozaar. The company hopes to achieve over $4
billion in sales for the drug in the next few years, and according to
Thomas Ebeling, the chief executive of the drug division of the
company, direct-to-consumer ads will be the driving force behind the
expected increase in sales.

The company spokesman went on to show that sales of two of its leading
drugs, Zelnorm, a drug for irritable bowel syndrome, and Elidel which
is an eczema medication rose sharply whenever the company promoted
these drugs through direct-to-consumer ads. According to Mr. Ebeling:
"There's a big opportunity for consumer awareness campaigns."

Sadly we say that when one drug company decides to markedly increase
its advertising budget the other big drug companies will also follow
suit in order to remain competitive. On the other hand you will not
see their R&D budgets increase proportionately to the increase in
their advertising budgets.

Direct-to-the-consumer ads is being extended another step as is shown
by the battle going on between the medical device makers Stryker
Corporation and Zimmer Holdings. Stryker has been featuring the famous
golfer Jack Nicklaus, who had hip replacement surgery, featured in
their ads on television promoting their new hip replacement device.
The new device made from ceramics and titanium sells for $4,000 to
$5,000.

On the other hand Zimmer has placed ads in Time and Newsweek,
featuring an older woman on a swing. The ads talk about the advantages
of having minimally invasive hip-replacement surgery as developed by
Zimmer. The surgery requires use of the Zimmer device and instruments.
The market for hip-replacement devices is estimated to have reached
$2.6 billion worldwide last year. About 300,000 hip-replacement
surgeries took place in this country last year.

Recently DePuy, a Johnson & Johnson subsidiary ran television ads for
its knee-replacement devices in Phoenix and West Palm Beach, Fla.
Medtronic took another direction for advertising by placing ads in the
rest rooms in dozens of restaurants in Minneapolis and St. Paul for
its implantable device to relieve incontinence.

The FDA requires strict advertising rules for drug advertisements,
such as the inclusion of negative side results in the ad. There are
very few rules that apply to the device makers, so it is more or less
a free for all as far as ads go in the device maker area. Only ads for
the riskiest devices, such as pacemakers and artificial hearts require
negative side results to be included in the ads.

The Stryker television ads do include a statement that "surgery
involves potential risks and recovery time." The Zimmer media ads
include no information on risks other than advising that a hip
replacement involves surgery and a period of time for rehab.
Advertising for medical devices is also regulated by the Federal Trade
Commission, which simply requires that companies not to make face or
deceptive claims.

Proctor & Gamble began advertising its generic version of
AstraZeneca's heartburn medication Prilosec on September 1, 2003.
Johnson & Johnson-Merck Pharmaceuticals Co., a joint venture of J&J
and Merck & Co. that produces a rival heartburn drug Pepcid, sued P&G
for falsely advertising that Prilosec OTC treats heartburn with one
pill.

A judge in the U.S. District Court of New York issued a temporary
injunction to stop the P&G advertisement. P&G's advertisement stated:
"1 pill, 24 hours, 0 heartburn." The joint venture's lawyers allege
that the OTC version of Prilosec treats heartburn with 14 pills not 1
pill and thus the advertisement was false advertising.

The label for Prilosec OTC instructs consumers to take it "once a day
(every 24 hours), every day for 14 days." The district court judge
ordered P&G to adjust its advertising and to file a report within 30
days to the joint venture and to the judge. The joint venture has to
post a $5 million bond to cover P&G's costs if the ruling is
overturned. P&G will appeal the ruling but at the same time it will
adjust its advertising till the matter is resolved. P&G will also
change its ad to read "1 pill a day, 24 hours, every day for 14 days."

Novartis is removing its television advertisements for Lamisil, its
toenail fungus treatment, after the FDA objected that the ads
overstated the medicine's effectiveness. Lamisil is Novartis'
fourth-biggest selling drug, garnering over $416 million in sales for
the first 6-months of 2003, up 19% from 2002. The drug competes mainly
with over-the-counter products that do not advertise.

The ad shows a cartoon battle between a giant Lamisil pill and a
monster, nicknamed Digger, who represents a toenail infection. In a
letter to the company from Jennifer Murphy, an FDA consumer promotion
analyst the fact that the cartoon may distract the viewer from the
voice-over listing the risks of the medicine. The animated battle also
suggested that Lamisil works all the time, although studies show it is
completely effective in only about 38% of patients.

Mark McClellan, commissioner of the FDA disclosed at a speech that his
agency would soon finalize an agreement with the SEC to share more
information, and punish drug companies that mislead investor with
false information in connection with discussion that they are having
with the FDA. At that same meeting Dr. McClellan revealed that his
agency is requiring Bristol-Myers Squibb Co. to run ads correcting
exaggerations it made in a print campaign for Pravachol, its
cholesterol drug. Bristol is also having an internal investigation in
connection with a subpoena it received as to whether or not it was
giving the correct information in connection with the "average
wholesale price" data that it supplied to Medicare and Medicaid.

The FDA warning letter that it issued to Bristol was the third one so
far in connection with misleading advertising in connection with
Pravachol. For the first 6 months this year, the drug has garnered
$1.3 billion in worldwide sales. The ads in question erroneously said
the drug is the lone medicine approved to prevent strokes in patients
not diagnosed with coronary heart disease and in diabetics.
Pravachol's stroke-prevention approval is only for patients with
coronary heart disease. Merck's Zocor is the only cholesterol lowering
medication that is approved by the FDA in connection with strokes.

The FDA has issued another warning latter to Allergan Pharmaceutical
Co. in connection with its advertisements for its drug Botox. The
warning was issued because the ads minimized the drug's risks and
promoted it for uses that it had not been approved for. The FDA first
approved Botox in 1989 for the treatment of crossed eyes and
uncontrollable blinking.

The ads identified by the FDA state that " more than half a million
people have already been wowed by Botox Cosmetic, America's most
popular cosmetic treatment." The FDA said that this type of ad does
nothing to point out the risk of the drug. The ads also say that the
drug is approved for the treatment of "frown lines" when its cosmetic
approval is limited to the temporary improvement in the appearance of
"moderate to severe glabellar lines" or the vertical lines between the
brows. This was the second warning letter that the pharmaceutical
company has received from the Center for Biologics Evaluation and
Research of the FDA.

According to the latest figures the drug companies spent $2.6 on
advertising directly to the consumer last year. Much of this money has
gone to promote medications that are new high cost variations on older
drugs, or even on the next generation of drugs whose patent has
expired. Secretary of Health and Human Services Tommy Thompson brought
this point home when he condemned any physician who prescribed Nexium
for his patient.

Prosecutors have filed a brief in support of Dr. David P. Franklin's
"whistle blower" lawsuit against Warner-Lambert in connection with his
suit alleging illegal actions by the drug company to promote the
"off-label" sales of the drug Neurontin. The U.S. attorney in Boston,
Michael J. Sullivan asserted in the brief that Dr. Franklin's lawyers
had "presented evidence of an illegal off-label marketing scheme that
is rife with false statements and fraudulent conduct." Warner-Lambert
was taken over by Pfizer Inc. in 2000.

In his brief Mr. Sullivan also alleged that Warner had invited doctors
to some continuing medical education sessions in which the company
claimed it would present unbiased information about Neurotin. These
classes were however massive promotional sessions to promote Neurotin
for pain relief and were planned not by independent experts but by
Warner-Lambert employees. David Westerbury, assistant attorney general
for Washington State, said in a court filing in this case that he was
leading the investigation by 47 states into whether or not Pfizer Inc.
made illegal payments to doctors who have Medicaid patients.

Corporate documents that were made public showed that Warner focused
it attention on respected doctors in major teaching hospitals who
would serve as "Neurontin champions." Dr. Steven C. Schachter, a
professor at Harvard Medical School and a physician at Beth Israel
Deaconess Medical Center in Boston received $71,477 from May 1994 to
September 1997 to speak to other doctors about off-label usage of
Neurontin. Dr. B.J.Wilder, a former professor of neurology at the
University of Florida received more that $300,000 for speeches given
from 1994 to 1997. Six other doctors, including some from top medical
schools received more than $100, 000 each.

Documents in the lawsuit disclose that a marketing campaign by Cline
Davis & Mann, a Manhattan advertising firm, laid out a "tactical plan"
with detailed strategies to increase "off label" sales of Neurontin
for uses such as pain management, psychiatric disorders, migraine
headaches and a condition related to diabetes. Newly filed court
papers show that Warner hired Scott-Levin, a health industry
consulting firm in Newton, Pa. was hired by Warner to track what its
sales reps were saying to doctors. In performing surveys of doctors
after visits from its sales representatives Scott-Levin found a
substantial number of them increased their prescribing of Neurontin.

Dr. David P. Franklin, a former Warner-Lambert employee as a so-called
"whistle-blower", brought the civil lawsuit in the Federal District
Court in Boston in 1996. Warner-Lambert was the parent company for
Parke-Davis, and it in turn was taken over by Pfizer in 2000. Details
of the case did not come to light until recently because the case was
kept under court seal until this past March. The newly released
documents include a 1996 report written by the Cline Davis agency for
Parke-Davis called "Neurontin War Games". Dr. Franklin was employed by
Parke-Davis as a medical liaison in 1996 and at that time he alleges
that he was trained to "cold call" doctors and to push Neurontin for
"off label" usage at that time.

Many drug companies use medical liaisons, who often have medical or
science degrees to answer doctor's technical questions but they are
not supposed to introduce "off label" information to the doctors to
whom they are speaking. Neurontin accounted for almost $2.4 billion in
sales for Pfizer last year, with about 78% of that total coming from
"off label" usage in 2000. Dr. Franklin worked for Warner-Lambert for
4 months before deciding to retire because of the improprieties that
he felt was ongoing in the company.

Dr Franklin also alleged that doctors allowed the Warner-Lambert
detail person to be in the examining room with the physician. It is
further alleged that the detail person encouraged the doctors to
recommend Neurontin for "off label" usage, including pain, bipolar
disorder and attention deficit disorder in children.

According to Dr. Franklin's attorney, Thomas Greene, Warner-Lambert's
marketing executives urged their superiors to let them promote the
drug for off-label uses. It is further alleged that the marketing
people urged this usage even though they were well aware that no
clinical trials had been performed to prove that the medication was
safe for off- label usage.

Mr. Greene cited two memos in support of his position in the case. In
a memo dated June 26, 1995 a marketing executive at Warner-Lambert
said that in the Northeast, doctors who attended educational dinners
that were held where Neurontin was the featured drug, wrote 70% more
off-label prescriptions for the drug than doctors who did not attend.

In a memo dated May 5, 1997 the marketing department proposed that
Neurotin be promoted to treat pain in diabetic patients by creating
education classes for doctors and sponsoring a symposium with the
American Diabetes Association. Dr. Franklin stated that one of the
reasons why he resigned from Warner-Lambert was because he felt that
the company was involved in an illegal campaign to market Neurontin
even though the safety of the drug had not been proved for these
off-label purposes.

Dr. Franklin further alleged that Warner gave financial incentives to
hundreds of physicians to prescribe Neurontin for unapproved uses, by
inviting them to dinners and weekend trips to resorts. Doctors were
paid to speak about Neurontin and encourage its usage for off-label
purposes. It is alleged that each doctor was paid $350 or more for
each day they let sales people watch as they examined their patients.
The federal investigation alleges that Medicaid paid many millions of
dollars for Neurontin prescriptions written for unapproved uses.

It is also alleged that Warner-Lambert hired two marketing firms to
write articles about the unapproved uses of Neurontin and find doctors
willing to sign their names to the articles as the authors thereof.
The marketing firms were allegedly paid $12, 000 for the articles and
the doctors were paid $1,000 for signing the articles as the authors
of the pieces.

In its 10-Q filing with the SEC, Pfizer Inc. had disclosed that the
marketing and pricing of two of its drugs have drawn the scrutiny of
federal and state investigators in the last several months. The drugs
involved are Lipitor, the cholesterol lowering drug and Neurontin,
which is a drug used in connection with epilepsy which was developed
and marketed by Warner-Lambert before Pfizer took it over. Neurontin
has been approved by the F.D.A. for the treatment of epilepsy, but has
been prescribed by many physicians for off-label usage.

Pfizer has admitted that over 78% of the prescription that were
written for Neurontin in 2000 were written for off-label uses. Sales
of the drug are expected to reach over $4 billion this year. As a
matter of fact the writer of this article has been using Neurontin as
prescribed by one of my doctors in connection with the treatment of
the inflammation and pain in sural nerve in my lower left foot. This
problem arose in connection with the spinal stenosis that I wrote
about in the article "Spinal Stenosis-A Personal Saga". I was never
informed by my doctor that this was an "off label" usage of the drug,
but so far I have had no adverse reactions from using the drug.

WJMK, a Boca Raton, Fla. production company had hired newscasters
Aaron Brown of CNN, and Walter Cronkite, the former CBS News anchor,
to serve as the hosts of a program called the American Medical Review.
WJMK hired the two newscasters to replace Morley Safer of the CBS
program "60 Minutes" who had worked for them for four years. Safer had
left the employment of WJMK when he realized that the job was not
consistent with the network's standards for newscasters. After the NY
Times published an article by Melody Petersen, entitled "A Respected
Face, but Is It News or an Ad?", Mr Aaron withdrew from the
arrangement and Mr. Cronkite also followed suit.

It turned out that drug companies and other health care companies pay
WJMK about $15,000 to have their companies or products featured in the
videos that seemed to show the newscasters in a news setting rather
than in an advertising setting. The videos ran for between two to five
minutes long and ran between regular public television broadcasts.

Although Mark Kielar, the president of WJMK said that the videos were
educational and not promotional no mention was made of the companies
that paid WJMK to produce the videos. Several of the companies that
were contacted by the reporter stated that they were told that they
could have any promotional material they wanted be included in the
program. Under regulations that cover public broadcasting such
sponsorship would be required to be disclosed under the law.

The FDA has undertaken a survey of doctors to try and determine the
effect of advertising on doctor's prescription drug writing habits. In
announcing some of the preliminary results, Janet Woodcock, head of
the FDA stated that most of the time, when a patient asks for a
specific drug that they saw in an ad, the patient would get that drug.

The survey encompassed over 500 physicians. Of the about 59% of the
physicians who recalled being asked for a specific brand-name drug,
about half prescribed that drug according to Dr. Woodcock. Only 40% of
the doctors believed that their patients understood the possible risks
and side effects of the drugs based on the ads. Direct-to-consumer ads
were first made legal in 1997. Last year direct-to-consumer ads
accounted for about $2.7 billion in drug ads, a threefold increase
since 1997. Fifty nine percent of the physicians said that having seen
a drug commercial added no benefit to a patient's subsequent doctor
visit.

Investigators from the General Accounting Office estimated that at
least 8.5 million Americans each year request and receive
prescriptions for specific drugs after seeing or hearing
advertisements for these products. According to Senator Susan Collins
(Rep-Me) who was one of the five senators who requested the report, "
The evidence suggests that consumers are paying a lot of attention to
these ads, so it's imperative that they be accurate. If the increase
in utilization is based on false claims, that's very troubling."

The report went on to say that the deceptive ads run their course
before the FDA can undertake any action. Many ads are on the air or in
print for only a short time. About one-fifth of the ads are on the air
for only one month, and about one-third of the ads are on the air for
less than two months. The accounting office stated that recent changes
in the procedure to issue the letter of admonition by the Bush
administration had "adversely affected" the government's ability to
curb deceptive practices. Some companies "have received multiple
regulatory letters over time for new advertisements promoting the same
drug."

The report went on to further state that the drug companies spent much
more on research and development then they did on advertising. Last
year the companies spent $30.3 billion on research and development and
$19.1 billion on all promotional activities, including $2.7 billion on
direct-to-consumer ads. As we point out however the drug companies
make much more in net income than they spend on R&D. As the report
also points out, the ad spending rate is increasing at a far greater
rate than is spending for R&D.

As part of its investigation as to the effect of direct-to-consumer
advertising the FDA announced it would pay about 500 doctors, randomly
culled from an American Medical Association list, anywhere from $50 to
$100 to answer a 15-minute telephone survey. The FDA felt the payment
was necessary because it found that doctors are not that anxious to
participate in governmental surveys of the industry.

Of the 500 doctors selected to participate in the survey, about 250
are general practitioners and the other half are specialists in
medical conditions that are particularly targeted by
direct-to-consumer ads. About 1000 patients will also be included in
the survey but they will not be compensated for participating in the
study.

The FDA had announced several months ago some other preliminary
findings of its surveys in connection with the advertising question.
One survey involved telephone interviews with 943 adults who had
visited a doctor during the previous three months. About 5% of the
patients surveyed said that a direct-to consumer ad had sparked the
visit, and 4% said they visited the doctor because they wanted to get
the advertised drug.

The survey found that 69% of the doctors gave their patients the
specific pill that the patient had requested. In only 6% of the cases
was no medication whatsoever prescribed for the patient when the
patient requested the advertised drug. When a patient asked about any
pill in general, only 41% of the requests were approved. The survey
also showed that doctors recommended over-the-counter medication in
only 13 % of the cases where a direct-to-the-consumer advertised
medication was requested.

The FDA has announced that it will begin a review of its
direct-to-consumer ad policy to see if drug ads "confuse consumers and
adversely impact the relationship between patients and their
health-care providers." The commission will be conducting two surveys
to help it decide whether the 1997 guidelines, which were finalized in
1999, should be changed, rescinded or kept in place.

Nancy Ostrove, an official with the FDA's Division of Drug Marketing,
Advertising and Communications, says the agency is especially
interested to learn if "inappropriate prescribing" is going on,
leading to "people getting drugs they shouldn't be getting." According
to IMS Health and Competitive Media Reporting spending on TV ads for
prescription drugs has more than quadrupled from $220 million in 1996
to $1.13 billion in 1999.

Pfizer Inc. announced that it had settled an investigation into the
advertising for its anti-biotic drug Zithromax. The investigation was
led by Hardy Myers, the attorney general of Oregon, and included the
attorney generals from 19 states. The investigation centered on the
alleged misrepresentation by Pfizer as to the effectiveness of
Zithromax in treating ear infections in children. The allegations also
included one in which Pfizer failed to disclose the risks of overusing
antibiotics.

Under the agreement, Pfizer will pay the 19 states $4 million for the
cost of the investigation and legal fees. Pfizer will also finance a
$2 million public service campaign over the next 3 years to tell
parents that antibiotics cannot be used to treat an ear infection that
is caused by a virus. Incidentally we see herein-another example of
incorrect usage of an antibiotic to treat a virus. This is just
another example of overuse of antibiotics that are helping to make
them useless in the battle against bacteria.

Pfizer had promoted Zithromax for children's ear infections by
creating a fictional mascot, Max a zebra. Zithromax sales
representatives have handed out small plastic zebras that doctors hang
from their stethoscopes. The company even donated a zebra to the San
Francisco zoo which they named Max. Sales of the drug brought in more
than $1 billion in 2002. It was also alleged that Pfizer claimed that
Zithromax could be used to treat ear infections with fewer doses over
fewer days than a rival drug.

As an interesting development in the area of advertising and
prescription drugs, the consumer advocacy group Prescription Access
Litigation project announced that it was suing Pfizer (Pharmacia) for
false and deceptive advertising. The matter in question involves
Pharmacia's advertising campaign for Bextra. The complaint alleges
that Pharmacia is telling doctors that Bextra alleviates acute pain
even though the FDA refused to approve Bextra as an acute-pain cure.

A study published by the New England Journal of Medicine in 1998
reviewed 70 medical journal articles that discussed calcium channel
blockers and found that 96% of the authors who supported the drugs had
financial relationships with the drugs' makers. A 1995 study showed
that diuretic use declined to 27% from 56% of the anti-hypertensive
prescriptions between 1982 and 1992.

The National Heart, Lung and Blood Institute (NHLBI) paid $85 million
for an independent study that was conducted on 42,418 patients aged 55
and older who had high blood pressure and at least one other risk
factor for heart disease, such as diabetes or cigarette smoking. Dr.
Claude J.Lenfant, the director of the NHLBI undertook the study in
1994 in order to try and ascertain which of the over 100 marketed
antihypertensive drugs were best suited to deal with high blood
pressure.

The study found that a diuretic, chlorthalidone, was more effective in
preventing fatal and nonfatal heart attacks than were three other
classes of drugs: amlodipine (sold as Norvasc, a calcium channel
blocker; lisinopril (Zestril and Prinvil), an ACE inhibitor; and
doxazonsin (Cardura), an alpha-adrenergic blocker. Diuretics are
generic drugs sold by companies that do not spend money on marketing.
The diuretics have lost their patent protection, so the brand name
drug companies do not actively market this drug.

In 1999, researchers at the Massachusetts General Hospital reported
that calcium-channel blockers were the most heavily advertised drug in
the New England Journal of Medicine in 1996, while there were no ads
in there at all for the diuretics. Analysts feel that the drug makers
will continue their spending on their drugs that deal with
hypertension as additional treatments for heart patients who need more
than one drug to control their blood pressure.

According to the results of a study done by Datamonitor, a marketing
analysis firm, the 14 top drug companies generated $17 in sales in
2001 for each dollar that they spent on marketing in this country,
down from $22.20 for each dollar that they spent in 1998.

The report went on to further indicate that promotional spending in
the U.S. by these largest drug companies increased at an average
annual rate of 32.4% from 1998 to 2001. On the other hand the
industry's annual increases in research and development increased by
8.2% in 1999 to 16.6% in 2001 according to data from PhRMA, the
industry's trade association.

The drug industry spent over $9 billion on direct marketing to
consumers and to health professionals according to the Datamonitor
study. Datamonitor recommended that either the industry should reduce
its promotional spending, or find more effective ways to spend its
money. In France and England, marketing spending fell at an annual
rate of around 4% from 1998 to 2001. From August 1997 through August
2002, the FDA issued 88 letters accusing drug companies of advertising
violations. 44 of the violations were for broadcast advertisements, 35
for print ads and 9 that cited both types of ads.

We have been writing about the pharmaceutical companies complying with
the requests from the FDA to stop what the agency considers false and
misleading advertising, but what happens if the company refuses to
comply with the request? Allergan Inc., an Irvine, Ca. drug company
received such a request from the FDA in connection with its
advertisements for Botox Cosmetic, a product that is used for the
removal of wrinkles.

According to Christine Cassiano, a company spokeswoman, the company
said "we are not intending to pull any of the material and wasn't
"currently changing any" of its advertising material. She further
stated that the FDA's criticisms are "factually incorrect and taken
out of context."

Botox was approved for use in 1989 to treat eye-muscle disorders, but
gradually it became more widely used for "off label" purposes such as
cosmetic uses. A product can not be advertised for "off label" uses.
In April, the FDA approved the injection of Botox to temporarily
improve the appearance of moderate to severe frowns. Botox has the
ability to smooth wrinkles by relaxing muscles, but the effect lasts
only for several months at most.

The company said it has plans to spend about $50 million in 2002 for
it marketing of the wrinkle removal treatment. The FDA objects to the
company's ads which refer to Botox's ability to "reduce your toughest
wrinkles within 7 days." The FDA said that its approval of the
treatment stated that it was good for the temporary removal of
wrinkles. The FDA complaint that the ad "strongly suggest that the
product is intended to treat the signs of aging."

If there were no agreement on this matter between the FDA and the
company, the first step for the FDA would be to send a "warning
letter" to Allergan. If Allergan does not comply with the warning
letter, the FDA will take them to court, so that the court can issue
and order making the company comply with the FDA request.

For the fourth time since 1998, the FDA has told Pfizer Inc. to stop
running misleading ads in connection with its cholesterol lowering
drug Lipitor. Once cited, most drug companies usually comply with the
FDA request. Pfizer said it had already complied with the request. The
most recent ad episode for Lipitor occurred in the fine-print section
that details potential risks and side effects. The Pfizer ads, which
appeared in several top selling magazines, indicated " that Lipitor
may lack the side effects of other members" of the class of drugs
known as statins. Liipitor agreed to change the wording in the ads.

In the ads cited by the FDA, Pfizer indicated that other statins had
potential risks but not Lipitor. The ad stated that the risk of a type
of muscle deterioration " has been reported with other drugs in this
class." The package insert for Lipitor states that the
muscle-deterioration condition has been reported with atorvastatin and
with other drugs in this class." Atorvastatin is the chemical name for
Lipitor. A Pfizer spokeswoman said that the inconsistency between the
ad and the package insert was corrected immediately.

A report from the Washington based consumer health organization
Families USA takes issue with the drug industry's claim that present
day drug prices are needed to sustain its research and development
expenses. To view the report entitled "Off the Charts: Pay, Profits
and Spending by the Drug Companies" in its entirety see:
http://www.familiesusa.org.

"Most pharmaceutical companies make considerably more in net income
than they spend on R&D. Indeed, the pharmaceutical industry continues
to be the most profitable U.S. industry, with profit margins in 2000
nearly four times the average of Fortune 500 companies." The report
also discusses the pay and compensation level of the top executives of
some of the drug companies. According to the report "All of the nine
U.S. pharmaceutical companies that market the top-selling 50 drugs for
seniors spent more money on marketing, advertising and administration
than they did on R&D." According to the report the percent of revenue
allocated to marketing/advertising and administration compared to
percent allocated to R&D is as follows:

Company

Mktg/Adv/Adm

R&D

Merck

15%

6%

Pfizer Inc.

39%

15%

Bristol-Myers

30%

11%

Pharmacia

37%

15%

Abbott Labs

21%

10%

Wyeth.

38%

13%

Ely Lilly

30%

19%

Schering-Pl

36%

14%

Allergan, Inc.

42%

13%

As you can note from the above, 8 of the 9 companies spent more than
twice as much on marketing, administration and advertising as they did
on R&D.

When we examine some of the figures from some of the individual drug
companies in regards to the increase in the percentage of their
revenues spent for marketing and administrative costs we see that it
far exceeds the percentage spent on research. In the year 2000
GlaxoSmithKline spent 37.2 % of its revenue on advertising, marketing
and administrative costs versus the 13.9% spent on research.
Bristol-Myers Squibb spent 30.4% of its revenue in 2000 on
advertising, marketing and administrative expenses versus spending
10.6 per cent on research.

Although we have researched and written a great deal about the issue
of advertising and the drug industry there are always some interesting
new facts that come to our attention. Melody Petersen's article in the
November 23, 2002 issue of the New York Times contained several
interesting factual items in connection with this issue.

She states in the article: " A 1998 survey of named authors writing
for some of the nation's top journals, including The Journal of the
American Medical Association, which published the survey, found that
11 percent of the articles had been ghostwritten." She went on to
state that "just $2.8 billion of the $11.8 billion the drug industry
spent on marketing was aimed at consumers; the rest paid for
everything from dinner meetings with doctors to sales calls and
medical education, according to Verispan, a health-care information
company." She concluded the article with the statement: " In
Washington, the FDA's new chief counsel, Daniel E. Troy, who fought
restrictions on drug promotion as a private lawyer, is leading a
review of regulations that could relax existing limits on
behind-the-scenes marketing of drugs."

Ad agencies owned by drug companies are playing an ever increasing
role in direct-to-consumer (DTC)) ads. DTC ads for prescription drugs
were first allowed in 1997. Pharmaceutical companies spent about $2.8
billion on consumer ads for prescription drugs in 2001, which
represented about an 8% increase from the spending in 2000. The
industry spent about $30 billion in R&D in 2001 up from about $26
billion in 2000.

CommonHealth, a division of the London based WPP Group ad agency is
spending about $70,000 on an ad campaign defending the drug industry
and its right to have DTC ads. The Prescription Access Litigation
project, a coalition of law firms and public interest groups brought
the first lawsuit against a drug company in connection with DTC ads.
The suit was brought against Schering-Plough Corp. and CommonHealth
for using deceptive ads in connection with the anti-allergy drug
Claritin.

Vanessa O'Connell wrote and interesting article in the Wall Street
Journal entitled "Agencies Join in Drug Development". In her article
she wrote "…agencies are helping drug companies recruit patients for
clinical trials and are even conducting medical experiments in
agency-owned labs." She went on to further state that "According to
PhRMA, the industry trade group, drug companies invested an estimated
$30.3 billion in research and development last year. For an agency,
getting involved early in the process can be lucrative on its own but
can (also) greatly increase the chance of getting the account if the
product ultimately comes to market. For the drug maker, agency
involvement can shorten the costly process of getting a drug form
development to market."

Some of the big agencies have marketing labs known as "contract
research organizations" which operate independently to test the
chemical compounds on patients and keep track of the results. Omnicon
owns a 20% stake in Scirex, a clinical research organization that
specializes in mental and neurological experiments for drug companies.
It bought Matthews Media Group Inc. in 2001, a company that
specializes in recruiting patients for clinical trials of drugs.

In determining drug company costs for marketing of drugs, an area of
concern that has grown to a great degree in the last several years is
the role of the pharmaceutical companies in the medical school
education process. Many medical schools require students to attend
drug company presentations or conferences that are paid for by the
drug companies. Critics complain that these sessions are used to push
the drug company's products. The drug companies often do not get
involved directly in these sessions, but instead use medical-education
service suppliers to get their message across.

In a survey of 42 medical-education service companies 76 % of their
clients were drug makers, and 45 % of their revenues were attached to
the presentations or conferences held in conjunction with medical
school events. A consumer group named the Public Citizens has
complained to the Accreditation Council for Graduate Medical
Education, which is a body that reviews the nation's medical-residency
programs. The accreditation council's executive board plans to discuss
the issue at their September meeting.

The letter from the group alleged that they were "anxious to make sure
medical students and residents are trained in environments that have
high professional standards". According to Mariana Daniels the
executive vice-president for CPE Communications, a unit of Donahoe
Purohit Miller in Chicago, a medical education services provider, the
sessions present educational materials about the product of the
sponsor and its competitors.

The financial section of Sunday's New York Times dated August 27,
2000, contains an article entitled " What's Black and White and Sells
Medicine" by Melody Petersen. The article describes how Pfizer, Inc.
has become a marketing machine on a scale comparable to a Proctor and
Gamble. Through the usage of plastic and stuffed zebras, and other
marketing techniques the company has made Zithromax a billion-dollar
drug in just a few years. The drug is an antibiotic that has been used
extensively for children even though federal officials have stated the
other antibiotics were better and cheaper. Pfizer spent about $193.4
million last year on direct to the consumer advertising, and when you
combine that sum with the spending of Warner Lambert of $63.8 that
makes the company the number one spender in the direct to consumer
market.

The issue of advertising and prescription drugs has entered a new
arena, namely cyberspace. According to a study from Jupiter
Communications, the New York research firm, 90% of the drug companies
plan to increase their advertising spending on the Internet, with 20%
of them indicating that they would double their spending in the next
year.

As a further indication as to what will be occurring, the advertising
agency holding company Omnicom Group announced that they would be
taking minority stakes in five health-care-related Internet companies.
Omnicom is the holding company for several companies including BBDO
Worldwide and DDB Worldwide. Two of the sites are aimed at consumers;
Healthology Inc, and Caresoft Inc., which runs the consumer site
theDailyApple.com. Two of the other sites are aimed at physicians,
namely eMedicine.com Inc. and WorldMedicalLeaders.com Inc. The fifth
site eResearchTechnology Inc is a clinical-trials site where drug
companies can better track tests of new medications.

Tom Harrison, chief executive of Omnicom's diversified services
division felt that the pharmaceutical companies would be more inclined
to come to Omnicom's database derived from visitors to the sites,
which he says will help companies "fine tune their promotions" aimed
at doctors and patients.

Up until now the drug companies have set up separate sites to promote
their brand drugs. Of the estimated record $1.8 billion that drug
companies spent on advertising in 1999 less than 1% was spent on Web
sites. The approach that the drug companies will be taking means that
they will be putting much greater emphasis on selling their drugs
through advertising on "independent" Web medical sites. Once again we
are faced with the issue of increased cost to the consumer for the
increased spending that will be taking place in the coming years for
cyberspace advertising. What if any rules should be set up in regards
to what the ads can or can't say on the Web sites? Another question
that will arise in connection with these Web sites will be the issue
of privacy.

Even though generic drugs filled 41% of all prescriptions sold, they
accounted for a mere 9% of the total cost spent on prescription drugs
in 1998. Merck-Medco Managed Care, a subsidiary of Merck & Co. is now
giving free samples of some generic drugs to doctors. This represents
a novel approach for the generic drug industry, which normally has not
been giving out free samples. IMS Health estimates that the drug
companies gave medical professionals about $7.2 billion retail value
of free drugs in 1999. GM Corp. has estimated that it would save $3
million a year for every one-percentage point increase in the use of
generics.

We now see estimates that run as high as $13 billion a year as the
total cost to the drug companies for the free promotional
expenditures, advertising expenses, medical educational expenses, etc.
We realize that marketing and promotion is a major expense for any
company that wants to sell its products, but at what point do you call
these expenses excessive?

The July 6th, 2000 edition of The Wall Street Journal had an
interesting article re the drug companies and their advertising
campaigns. It was entitled "Drug Firms, Stymied in the Lab, Become
Marketing Machines". We cite the following paragraph from the article
since it gets to the core of the problem very succinctly:

"In fact, the pharmaceutical industry is gradually shifting the core
of its business away from the unpredictable and increasingly expensive
task of creating drugs and toward the steadier business of marketing
them."

In looking into the marketing area for prescription drugs we must look
at both major aspects involved in this topic, and that is advertising
and the use of free samples. According to IMS Health the drug
companies gave out over $7.2 billion at retail of free samples to
doctors and nurse practitioners. Please keep in mind that these free
samples are for the newer drugs not for the ones that are about to go
off of patent protection. The industry states that the free samples
enables a patient to use the drug, before spending money on it, so
that the drugs effectiveness can be judged by the patient, and also to
see if the patient will have any side effects from using the drug.

The Food and Drug Administration regulations require that a doctor
must sign for any free samples that he/she receives. Thus even if it
is only for a minute or two, the salesperson will have a chance to
discuss the drug with the physician. As of the latest figures there is
1 salesperson for every 10 doctors in this country.

Some insurance companies and HMOs will be instituting a free sample
system of generic drugs to doctors to see if this will encourage the
medical professionals to recommend generic drugs for their patients as
well as brand name drugs. Listed below in the millions are the top 5
sample prescription drugs left in doctor's offices:

Claritin (now off patent)

-Antihistamine-Schering Plough

35.7 million

Celebrex-

Anti-inflammatory-Pharmacia

18.5 million

Augmentin

-Antibiotic-SmithKline Beecham

18.5 million

Zyrtec-

Antihistamine-Pfizer

16.5 million

Claratin-D

-Antihistamine-Schering-Plough

13.0 million

Source: IMS Health

The industry spends about twice as much for marketing and
administration as it does for research and development. This year drug
makers will spend $26 billion, or 20 % of revenue, finding new drugs
and then winning approval for them. The industry utilizes about 70,000
U.S. salespeople costing nearly $7 billion per year. Prescription drug
sales totaled in excess of $100 billion for the first time in 1999.

Merck & Co. has drawn the scrutiny of the FDA in connection with two
of it ads for Vioxx and arthritis. Under FDA rules, when an ad
mentions a drug's name and it benefits, it must also contain a
statement about any of the adverse risks associated with the drug.

In the two Merck ads that are at issue in this matter, the Olympic
figure skater Dorothy Hammill is featured along with the same mountain
ice rink and the same theme song. One of the ads mentions Vioxx but
not arthritis; the other ad mentions arthritis but not Vioxx. The
running time of the two ads taken together is 45 seconds long. Merck
contends that the two ads are separate and distinct ads, so that there
is no requirement that need be met to mention the possibility of the
adverse risks that the consumer of Vioxx is faced with.

The ad that mentions arthritis but not the drug in question is called
a "help seeking ad", since the ad usually ends with the admonition to
see your doctor and seek his help with the ailment. The ad that
specifically mentions the drug is called a "reminder ad", since it
mentions a drug's name, but does not detail its benefits or risks. The
FDA said that if the ads ran back to back, they would be considered
one advertisement, and could constitute a violation of the FDA ad
rule.

October 10th, 2002 was National Depression Screening Day. Students at
dozens of colleges, high schools and hospitals filled out
questionnaires about sleep, weight loss or gain, feelings of
hopelessness and thoughts about suicide and dying. If warranted or if
requested by the student, he or she would be referred to an
appropriate medical professional. The event has been underwritten by
four of the largest manufacturers of anti-depressants. The four are
Wyeth Inc. (Effexor), Eli Lilly & Co. (Prozac), GlaxoSmithKline PLC
(Paxil), and Pfizer (Zoloft).

Wyeth has also undertaken a campaign to bring a mental-health
educational forum to college campuses to increase student awareness of
depression, and the medications that can be taken to help anyone with
this condition. The 90-minute forum is called "Depression in College:
Real Life, Real Issues." The program will feature free screenings for
depression, and the speakers will include physicians, medical
professionals, and professors.

Cara Kahn the star of the MTV reality show "Real World Chicago" will
be the spokeswoman for the forum. Ms Kahn who is 23 years old, is a
graduate of Washington University, and she started to take Effexor
while she was a student at the University. As a matter of fact she has
spoken about taking the drug on the TV show. Both Wyeth and Ms. Kahn
declined to say how much she is being paid by the company for her
appearances. According to Ms. Kahn, "In accepting the job, I really
made it clear that I am not a walking commercial."

Wyeth said that the forum is meant to educate the students about
depression, and not to sell pharmaceuticals. There will not be any ads
or signage for Wyeth at the forum, although the company will be
acknowledged as a sponsor of the event on a brochure.

The forum raises an interesting issue in that it can be looked at as
one in which the issue of depression will be brought out into the open
on the campus, or in fact, will it be used to "plug the drug". Will
the adverse effects of the drug be pointed out, or will it be pushed
back in the corner?

Judge Mairana R. Pfaelzer of the U.S. District Court of Los Angeles
rescinded her earlier order that barred GlaxoSmithKline, PLC from
advertising the antidepressant Paxil as "nonhabit forming". The ad
restriction was sought in a lawsuit by about 35 Paxil users who
contended that some patients experience withdrawal symptoms like
nausea and insomnia when they stop using the drug.

Previously Judge Mariana R. Pfaelzer had issued an order effective
September 1 that required GlaxoSmithKline to cease claiming in its ads
for Paxil, that the drug is "non-habit forming". Paxil was the second
best selling anti-depressant drug last year (sales of $2.6 billion in
2001), with Pfizer's Zoloft being the top selling anti-depressant in
2001.

In the lawsuit the plaintiffs allege that they suffered severe nausea
and other psychological problems when they stopped taking the drug.
The lawsuit is seeking to establish class-action status for the 35
plaintiffs in the case, and for everyone else who suffered dependency
or withdrawal symptoms when they stopped taking Paxil. Prior to this
suit the FDA had reviewed the Paxil ads and had agreed that the drug
company could make the claim that the drug was "non-habit-forming".

The U.S. Justice Department had filed a brief in the case urging the
judge to reconsider her decision to limit Glaxo from claiming that the
drug is "non-habit forming". The government's brief claims that her
decision was contrary to federal law, and that the FDA's allowance of
the ad should be the controlling factor in the case. The brief goes on
to claim that federal law should take precedence over the state of
California law.

In her decision Judge Pfaelzer stated that she was not making any
finding as to whether Paxil "is in fact addictive or induces
dependency." She did however find that the plaintiffs "are likely to
succeed in their argument that the ads were misleading and created
inaccurate expectations about the ease of withdrawal from the drug.
Glaxo's attorneys admit that a patient who stops taking Paxil can
suffer "discontinuance symptoms" similar to what happens when a
patient stops taking a medication. This however is much different than
the "withdrawal symptoms" as alleged by the patients in this case.

The pharmaceutical industry is planning to expand its direct to
consumer advertising by using a 24-hour-a-day TV network, which was
recently launched to 50,000 hospital patients. The network hopes to be
able to reach 22 million hospital patients by the year 2003.

Hospital patients are the captive audience that the Patient Channel
hopes to entice, with the bulk of the advertising coming from the
pharmaceutical industry. According to the Nielsen-Media Research
organization, the pharmaceutical industry spent $2.7 billion on
advertising in 2001. According to Kelly Peterson, director of network
marketing at the Patient Channel, the service allows big "marketers to
directly associate their products with a particular condition in a
hospital setting." The Patient Channel is owned by General Electric
Co.'s GE Medical Systems.

Federal regulations require that a hospital educate patients about
their condition. Thus instead of a hospital using a nurse to give the
instructions to the patients the hospital might use the television
program to do the educating of the patient. Many consumer advocacy
groups fear that the ads shown in the hospital setting for the
pharmaceutical products will leave the impression in a patient's
thought process that the hospital is therefore recommending the drug
being advertised.

The United Seniors Association committed $8 million to promote nearly
two dozen House candidates who favored the Republican prescription
drug bill passed by the House. The Association also had ads aimed at
the Senate to pass similar legislation to the bill passed by the House
on the matter. Most of the money will come in the form of a "general
educational grant" from PhRMA. Another group advertising in favor of
the industry's point of view is the 60 Plus Association. According to
Ken Goldstein, a professor of political science at the University of
Wisconsin, "The drug industry is once again on track to be the biggest
industry-group spender in American elections."

In an interesting development in attempting to restrict the
pharmaceutical companies direct-to-consumer advertising several states
are in the process of passing legislation to deter the drug companies
from having such advertisements.

In New York State, a bill in the assembly (A.6220) would amend the
state tax law to eliminate the deductions for certain expenses
incurred in the advertising of prescription drugs. The bill is
presently pending in the Assembly Ways and Means Committee. A bill in
California that would have disallowed any tax deduction for expenses
incurred by drug companies to advertise their products died because of
inaction in February 2002.

Hawaii passed and the governor signed legislation that requires drug
manufacturers to report costs of advertising and marketing of
prescription drugs in the state in an annual report. In Kentucky a
resolution is pending (B.R.433) in the Senate Judiciary Committee that
would urge the U.S. Congress, the Department of Health and Human
Services, and the FDA to limit or ban advertising directly to
consumers.

AARP has launched a new $10 million advertising campaign aimed at
increasing the public's awareness as to generic drugs, and also to
make people more aware as to the side effects of the drugs they are
taking. Please keep in mind that Bill Novelli, who is the new head of
AARP, led the advertising campaign against tobacco usage 6 years ago.

Mr. Novelli acknowledged that the campaign by AARP is little more that
a "drop in the bucket" compared with the $2.5 billion spent by the
pharmaceutical industry on direct-to-consumer ads. One of the ads will
state: " Do not let advertising sell you on drugs you don't need." Two
trade groups, the National Association of Chain Drug Stores and the
American Pharmaceutical Association, which represents pharmacies, will
help AARP in the campaign with counter displays and pamphlets.

Celebrity advertisements for certain drugs have come into the
limelight lately. Rob Lowe, the actor from the television hit show
"The West Wing" has starred in an ad campaign for Amgen Inc.'s new
drug Neulasta, which is the next generation for its blockbuster drug
Neupogen. The drug is used to treat neutropenic infections, which
result from cancer chemotherapy's weakening the body's disease
fighting white blood cells. Neupogen required daily injections while
Neulasta needs to be administered every two to four weeks.

FDA rules state that if a particular drug rather than a condition is
mentioned in a celebrity ad, the ad must state what the main side
effects of the drug are, and also show where the consumer can find
more detailed information via an 800 number or a Web site.

In its battle to try and retain sales for its new allergy drug
Clarinex, Schering-Plough wants you to call them or visit their Web
site for information on how to get a free seven-day sample of the
drug. Clarinex is Schering's wild card in trying to replace Claritin's
patent is due to expire on December 20th of this year. This free
sample is worth about $15 retail.

In the same vein many brand name drug companies are offering free
samples or through rebates for their drugs through free coupons. For
Viagra, the promotion involves a six free pill sample worth about $50
retail; for Xenical a weight-loss drug the promotion involves buying a
3-month supply in return for which you get a free 3-month supply worth
about $356. In the case of Prozac, the antidepressant drug you can get
a one-month free trial package worth about $75. The offer allows only
one per household and you must have a doctor's prescription in order
to be able to get the drug.

In most of the cases where these offers are being made there is a
generic version of the drug that is available at a cheaper price. In
order to get the coupon you must be willing to answer several
questions involving your personal medical history.

In order to find these offers you should go to the Web site of the
brand name drug company. (Please see our article Drug Manufacturers
Directory.) Check the site regularly because there is no definite
timetable as to when these offers are made. Sometimes the site does
not even mention the fact that by requesting additional information
about a particular product, you may in fact receive a coupon in the
informational package that you receive. Sometimes the coupons are sent
to physicians so you should ask your doctor when he prescribes a
particular drug to you, if he has any coupons issued by the
manufacturer of the drug.

Centocor, a subsidiary of Johnson & Johnson, has been cited by several
doctors for improper marketing in connection with its rheumatoid
arthritis prescription drug Remicade. Centocor had a document on its
website that stated that one of the "benefits" of prescribing Remicade
was the "financial impact" on the physician's practice.

This situation arises because Remicade is covered under Medicare,
since the drug must be administered intravenously in the doctor's
office. Rick D. Anderson, vice-president of Centocor's immunology
division stated that this document was outdated and inadvertently had
remained on the company's website. The document in question is no
longer on the site. Most of the drugs used to treat rheumatoid
arthritis are in pill form. Enbrel is an injectible medication that is
self-administered by the patient and therefore not reimbursed by
Medicare.

In addition to the financial benefit that may accrue to the doctor,
many physicians prescribe Remicade for their elderly patients, since
Medicare does not cover most other medications. The cost for a full
year's treatment of rheumatoid arthritis with Remicade comes to about
$20,000, while a year's treatment with a generic drug such as
methotrexate would cost about $400.

A new facet in the debate about advertising and medicine has appeared
in the on-line site eMedicne.com Inc. that provides peer-reviewed
reference material on disease to physicians. This site is partially
owned by Seneca Investments LLC that is a joint venture formed by the
ad agency Omnicom Group Inc.

The ads on the site are appearing in the middle of clinical papers,
written by doctors and scientists about research work that they are
doing. The American Medical Association specifically states that
"Placement of advertising adjacent to editorial content on the same
topic is prohibited."

Before direct-to-consumer advertising was made legal in 1997 there
were 28 full time workers on the staff of the FDA's Division of Drug
Marketing, Advertising and Communications. According to Thomas Abrams,
who is director of this division there were 30 full time staff members
in his division in 2001. This is in spite of the fact that the number
of ads submitted for review increased more than 34% from 25,236 in
1996, to more than 34,000 in 2001.

On the other hand the number of citation letters alleging that ads or
marketing material were false, misleading or otherwise out of
compliance decreased from more than 150 in 1996 to 71 in 2001.
According to the pharmaceutical industry the reason for the decrease
in the number of citation letters was due to the fact that the
industry learned how to advertise within the boundaries of the law.

GM launched a "Generics First" ad campaign in 2001 promoting generic
drugs in e-mails, paycheck stubs and corporate newsletters. The
company's cost for drugs under its health plan had risen 14% in 2001
over 2000 to $1.3 billion. Its pharmacy-benefits manager has been
dropping off samples of generic drugs at doctor's offices. AARP is
also promoting generic drug usage among its 35 million members.
According to one drug-benefits company, Express Scripts Inc., drug
costs for large employers have risen more than 16% annually since
1997.

In 2001 about 16.5% of retail drug purchases were paid directly by the
consumer, according to NDC Health, a health care information company.
The rest was paid for by the government or managed care. According to
NDC the industry spent about $7.2 billion on their sales force, which
is almost 2 1/2 times more than they spend on ads. The industry
employs over 80,000 sales reps as of the latest figures available for
2001.

According to CMR the top advertised drug in 2001 in millions were as
follows:

Drug

Treatment

2001 ad dollars

Vioxx

Osteoporosis

$135.43

Celebrex

Arthritis

130.36

Nexium

Heartburn

126.14

Viagra

Impotence

90.63

Allegra

Allergy

89.09

Zocor

Cholesterol

85.64

Gluco-XR

Diabetes

80.90

Claritin

Allergy

79.72

Imitrex

Migraine

70.60

Flonase

Nasal

68.99

Paxil

Antidepression

65.12

Zyrtec

Allergy

62.71

Procrit

Anemia

59.45

Singulair

Asthma

57.90

Zoloft

Depression

55.93

The results of a study from NDCHealth, a health care information
company, show that Americans paid about $208 billion for prescription
drugs in 2001. This was an increase of about 18 % over what we paid in
2000. The pharmaceutical companies spent about 6 % more on sales
representatives, consumer advertising and meetings with doctors to
promote drugs than it did in 2000.

The NDC results showed that total prescriptions written rose 6.6% to
3.3 billion in 2001. This is the equivalent of almost one prescription
a month for every American. More than 7 million people took
anti-depressants last year which was an increase of 700,000 people
from 2000.

According to researchers spending for direct-to-consumer drug ads
increased almost threefold from 1997 to 2001 to nearly $2.8 billion.
The study was done at Harvard University and the Massachusetts
Institute of Technology, and their report is entitled "Promotion of
Prescription Drugs to Consumers". The results were recently published
in the New England Journal of Medicine.

The study found that direct-to-consumer ad spending accounted for 15%
of the spending to promote drugs in the U.S. in 2000 up from almost 9%
in 1996. The year 1996 is an important year to look at because the law
regarding direct-to-consumer drug advertising was changed in 1997.

The study concluded however that: "The initial surge in
direct-to-consumer advertising preceded the 1997 guidelines...thus the
1997 guidelines may not have been the most important reason for the
overall increase." In looking at the total of the print and broadcast
ads, 60% were for just 20 medications. Total spending on prescription
drug promotion grew about 70%, from about $9.2 billion in 1996 to
$15.7 billion in 2000.

Television advertising saw an almost sevenfold increase in spending,
to $1.6 billion from $220 million from 1996 to 2000. The researchers
also reported that overall spending aimed at doctors, which included
direct-to-consumer ads, free samples, medical journal ad spending,
etc. slipped to 84% from 91% during the period from 1996 to 2000.

As part of its campaign to get users of Claritin to switch to
Clarinex, Schering-Plough is now utilizing a "free 7-day coupon". The
patent life for Claritin has expired so Schering is trying to get the
consumers to switch to its newest anti-allergy drug Clarinex as
quickly as possible. Schering has also announced that it would be
switching Claritin from a prescription drug medication over to a drug
that would be sold over-the-counter.

Clarinex won the FDA approval to tell patients that the medication
helps cure year-round indoor allergies, which is something that
Claritin had not been approved for. Pfizer's allergy drug Zyrtec is
approved to treat both indoor and outdoor allergies, but Zyrtec isn't
approved as a non-sedating antihistamine. Aventis's anti-allergy drug
Allegra has not been approved for indoor approval.

For all of 2001 the most heavily advertised drugs in the U.S. were
Celebrex (Pfizer) and Vioxx (Merck), each of which spent more than did
Coca-Cola in advertising for the year. Celebrex replaced Vioxx as the
most heavily advertised prescription drug in the U.S. in 2001, with
Vioxx dropping into second place.

Quintiles reported that the drug industry had 81,600 sales
representatives in 2001 an increase of 45 % over the number reported
in 1998. Thus the increase in the percentage of sales representatives
in the industry continues to grow at a much faster pace than the
spending the industry is doing on research and development.

The Institute's research showed that consumer drug advertising
increased by about 35% in 2000 to $2.5 billion up from the $1.8
billion spent on consumer drug ads in 1999. GlaxoSmithKline, the
British drug company spent more on consumer advertising than any other
company. It increased its consumer drug advertising campaigns spending
to $417 million in 2000 which was a 40% increase over its spending in
1999. The 50 top selling drugs accounted for almost half the $20.8
billion increase in consumer drug spending last year, with the
remainder of that spending coming from the 9,850 other drugs in the
industry's arsenal.

According to an earlier study from the Institute 25 of the most
heavily advertised drugs accounted for more than 40% of the increase
in retail drug spending last year. While retail spending for
prescription drugs rose from $93.4 billion in 1998 to $111.1 billion
in 1999, the amount spent on consumer advertising rose from $1.3
billion in 1998 to $1.8 billion in 1999. According to these figures
advertising expenses grew 38% while sales grew at only and 18 % rate.
The study further stated that: "Mass media advertising of prescription
medicines is heavily concentrated among a relatively few drugs, about
50". Steven D. Findlay, author of the report stated: "Our analysis
suggests that consumer advertising could be responsible for 10% to 25%
of the recent increase in prescription spending".

We all agree that it is important to make the public aware as to the
deadly consequences of heart disease. Bristol-Myers Squibb has
embarked on such a campaign, with stars such as Angela Bassett, Dana
Carvey, Kirk Douglas and Sylvester Stallone appearing in magazine ads
in the forefront of the campaign. These celebrities are volunteering
their time in the ads, which will urge the viewers to take the
"Pravachol Just for Your Heart Challenge". Nearly 1 million people
died last year from cardiovascular disease.

In addition to the celebrity ads, Bristol embarked on another ad
campaign, which features "Three Reasons To Ask How Pravachol Can Help
Protect Your Heart". The ad includes a coupon that entitles the holder
to a free 30-day supply of Pravochol, if the user is a new potential
customer. The ad also highlights " High Cholesterol Isn't Just a
Number. It's a Warning".

Bristol-Meyer's Pravachol is presently in third place among the statin
drugs that help to lower cholesterol levels. Bristol's partner in the
campaign is the Entertainment Industry Foundation, a charitable arm of
the movie and television industry. According to Lisa Paulsen,
president of the foundation the ads should be looked on as public
service announcements rather than as ads for Pravachol. Ms. Paulsen
further stated that Bristol made a "significant gift" to what has
grown to be a $10 million campaign called the National Cardiovascular
Research Initiative. Some of the money raised will help finance
research at some of the nation's top cardiovascular centers.

On the other hand Pfizer, the maker of the best selling cholesterol
lowering drug Lipitor has also taken out ads which urge people to have
their cholesterol levels checked. The ads do not contain any mention
of their drug Lipitor. Incidentally, Lipitor has become the number 1
selling prescription drug in the U.S.

The Food and Drug Administration, in a September 17, 2001 warning
letter to Merck & Co. complained of the company's false and misleading
advertising in connection with its rheumatoid arthritis drug Vioxx.
The FDA in the warning letter stated that Merck has "engaged in a
promotional campaign for Vioxx that minimizes the potentially serious
cardiovascular findings that were observed in the Vioxx
Gastrointestinal Outcomes Research (VIGOR) study, and thus,
misrepresents the safety profile of Vioxx." The warning letter went on
to further state that Merck has failed to modify its promotional
practices in response to previous complaints from the FDA and that the
company's actions have been "particularly troublesome". There has been
a potentially serious interaction between Vioxx and Coumadin.

The agency also requested that Merck send out letters to all health
care providers who were or may have been exposed to the misleading
promotions, advising them of the misleading information that Merck
disseminated. Merck had until October 1 to notify the FDA as to what
kind of corrective measures the company will undertake to rectify this
matter. It was also alleged that the company made unsubstantiated
claims about the relative benefit of Vioxx. A warning letter from the
FDA is more serious than the more usual routine citation that the
agency sends to an offending drug company. Thus time and time again we
see that drug companies continue to flout the rules in regards to
advertising their products.

In another example of how the drug companies flout the rules in
regards to advertising their drugs, GlaxoSmithKline PLC had been cited
5 times by the FDA since 1999 for improper, misleading, or false
marketing involving its popular diabetes drug Avandia. In the latest
episode a more serious warning letter has been issued because of the
"seriousness of your violations" and "the fact that violative
promotion of Avandia has continued despite your written assurances"
that it would stop.

Avandia had sales of $534 million in the first 6 months of 2001. The
warning letter was issued because the company's sales representatives,
speaking with doctors at a recent medical conference denied the
existence of serious side effects as to cardiac related matters even
though the drug's label specifically warned about such side effects.
The company was also cited for misrepresentations about the drug in
its TV commercials.

The American Medical Association and nine major drug companies are
combining their efforts in a major advertising campaign in which the
thrust will be to tell doctors not to accept gifts from the drug
companies. The issue involves the free gifts, trips and even payments
to attend seminars from the drug companies to the members of the
medical profession.

The AMA is contributing about $500,000 to the ad campaign and the nine
drug companies are contributing anywhere from $50,000 to $100,000
towards the campaign. AMA policy specifically states a limit of $100
on such gifts and states it should not include trips and hotel
accommodations. Many medical ethicists question the propriety of such
a campaign itself wherein the drug industry and the A.M.A purportedly
act in a united fashion to question unethical conduct caused by one of
the parties inducing the other party to act improperly.

In recognition of today's era the Federal Trade Commission and the
Food and Drug Administration announced that they were stepping up
joint enforcement actions against companies marketing fraudulent
health products over the Internet. The initial action called Operation
Cure dealt with false claims made by 6 small companies. The companies'
products made claims about treating such various ailments as cancer,
diabetes, Alzheimer's and AIDS using herbs and dietary supplements. In
addition to these 6 companies, dozens of other companies have received
warnings about their claims for health products.

Earlier this year these governmental agencies sent out warnings to 48
Internet companies that promoted a consumable form of silver, known as
colloidal silver, as a cure for everything from acne to AIDS. About 25
% of the 48 companies voluntarily agreed to remove these ads. Last
year the trade commission found nearly 1,200 Internet companies
selling products with curative claims that must, by law, be approved
by regulators. About 25% of these companies also voluntarily agreed to
remove these claims.

The results of a study of drug advertising conducted by Scott Neslin,
a marketing professor were released in the Association of Medical
Publications. The study compared the return on investment for the 4
marketing tactics most often used by drug companies. According to the
study the drug companies spent the following:

To advertise drugs directly to consumers via TV, magazines and
 other media the drug companies spent about $4.5 billion in 2000.

To reach doctors through one-on-one office visits, free samples
 and small group meetings they spent about $6.2 billion in 2000.

On various and sundry medical events and meetings they spent about
 $1.9 billion in 2000.

On medical-journal advertising aimed at medical professionals they
 spent about $527.1 million in 2000.

According to the results of the study, print ads in medical journals
deliver a higher return than do the other marketing tactics. We must
point out however that the Association of Medical Publications funded
the study, even though the Association denies that this influenced the
findings. Incidentally the spending on advertising by the drug
industry brought it into 5th place as far as industry groupings were
concerned in ad spending.

The industry that spent the most in 2000 was the automotive industry,
which spent about $11.50 billion on advertising. The retail industry
spent about $10.10 billion, the media industry spent about $6.90
billion and the financial industry spent about $5.80 billion according
to Competitive Media Reporting, PERQ/HCI and Scott-Levin.

IMS Health estimates that $4.04 billion was spent by the
pharmaceutical industry on marketing directly to doctors, which is up
64% since 1996. This is about 40% more than the $2.5 billion that was
spent by the industry on advertising to consumers in 2000. The Wall
Street Journal recently highlighted this issue in an article by Chris
Adams entitled "Doctors on the Run Can 'Dine 'n 'Dash' In Style in New
Orleans". The article highlighted the matter of the drug companies
giving inducements to doctors "to learn more about their products".

Claritin was the 3rd most widely advertised drug in the United States.
Schering-Plough has spent over $322 million in advertising the drug in
1998 and 1999. In the year 2000 Schering has spent over $100 million
advertising Claritin. With Claritin having come off prescription
status, Schering is now switching their ads over to using Clarinex,
the next generation prescription drug to Claritin.

For the fourth time in 16 months the Food and Drug Administration
cited Pfizer Inc. and Pharmacia Corp for improper marketing of
Celebrex, the anti-arthritic drug they co-market. The "warning letter"
dated February 4, 2001 cited the "repeated promotional activities that
minimize the potentially serious risk of using Celebrex" together with
a common blood-thinning medication.

This most recent episode involved a doctor trained by the drug makers
who called a group of other doctors over a speaker phone and made
"several unsubstantiated comparative claims" regarding Celebrex. A
Pharmacia spokesperson stated that the company had taken action to
prevent the situation from happening again. The "warning letter" went
on to further state: " Despite your assurances, however, your
violative promotion of Celebrex has continued". The previous letters
were not considered "warning letters" but nevertheless we must ask how
many times can a violation re-occur without incurring a more severe
punishment than a slap on the wrist.

In October 1999 the Food and Drug Administration's Division of Drug
Marketing, Advertising and Communications warned Pfizer Inc. and
Pharmacia Corp., the co-marketers of Celebrex, that the marketing
material for the drug was false and misleading. In April 2000 the same
warning was issued to these 2 companies concerning false and
misleading advertising of the same drug. In November 2000 guess what?
Yes! The same warning was once again issued to the same companies
because of false and misleading advertising concerning the efficacy of
Celebrex.

The FDA criticized the continued use of certain homemade promotional
pieces, even though the companies insisted that these were only
isolated occurrences. According to the FDA such activities by the
companies " demonstrate a continuing pattern and practice of violative
behaviors that evince widespread corporate involvement and
acquiescence with your employees' activities." No fines were issued,
just another slap on the wrist even though we are talking about false
and misleading advertising. Remember the background for this
advertising relates to the battle between Celebrex and Vioxx the
competing anti-arthritic drug made by Merck for supremacy as the
number one selling anti-arthritic drug.

When you add up the total of monies that the drug companies spend on
advertising you come across a difficult expenditure to classify.
Should money spent in opposing Medicare coverage for prescription
drugs be classified as a political contribution, or should it be
included as a research and development cost in assessing what price a
prescription drug should cost the consumer. Bruce Josten, the top
lobbyist for the U.S. Chamber of Commerce confirmed that the
organization intends to spend "multiple millions of dollars" in
promoting a non-governmental solution to the prescription
drug-Medicare coverage question.

Pharmaceutical companies are the main donors to the expected $20
million dollar ad spending campaign from the Chamber, which will
promote the candidacy of mainly Republicans who side with them on this
issue. In addition to this $20 million spent by the industry on the
Chamber campaign, we discuss in this article below the $35 million the
industry is spending to fund the Citizens for Better Medicare.

According to figures from the Citizens for Better Medicare, the drug
industry has spent about $8.46 million on issue ads related to
opposing Medicare coverage for prescription drugs. The Public Citizens
Congress Watch estimates that the drug industry has spent about $167
million on its lobbying effort so far during the 2001 election
campaign. We realize that every industry has the right to spend money
to promote their own interests, but at what point do these
expenditures become so excessive and costly to the members of the
public who end up paying for these costs in the form of higher
prescription drug prices? It has been estimated that the industry made
about $19 million in direct donations, mostly to Republican candidates
and the party.

The FDA approved 53 novel drug applications in 1996.This number
dropped to 35 in 1999, and was down to 16 for the first half of 2000.
With the shortfall in research discoveries to overcome the easiest way
to do this is to increase the price of the new drugs that are
discovered. Add to that the big increase in advertising the product
from the industry and we get to the core of the problem.

Several new groups have been formed recently to deal with the issues
that have arisen as a result of the increase in prescription drug
advertising. One of the new groups is RxHealth Value, of Berkeley, Ca.
RxHealth members include consumers, employer health-care associations,
physicians and health-care organizations. The group hopes to get the
U.S.Food and Drug Administration to issue stricter rules regarding
prescription drug advertising.

Two of the hot spots in connection with this issue are inaccurate ads
and also advertising that fails to tell the user about all of the
risks and side affects associated with a particular drug. In an AARP
survey it was determined that about one-third of the 1,300 consumers
questioned failed to notice the small print in the advertisements
indicating the side effects and risks of the medication being
advertised. Under the "fair balance" provision of the FDA rules
regarding prescription advertising both the benefits and risks
associated with a particular drug should be fully disclosed in the
same communication.

In August of 1997 the FDA relaxed its rule regarding television
advertising. Instead of having to point out the negative effects in
written ads that a drug may result in when used, the commercials on
television merely require the posting of an 800 number to call or to
ask your doctor for more information about the potential negative
consequences of the drug.

A non-activist group involved in this issue is a group named EthicAd
Inc.which is based in Atlanta. This group consists of physicians from
John Hopkins University School of Medicine, Harvard Medical School, U.
of North Carolina Medical School and the Mayo Clinic. This group is
seeking voluntary guidelines to be set up regarding the advertising of
prescription drugs. The group will host a national meeting in January
to better define standards for prescription drug advertising.

The Health Insurance Association of America and Blue Cross based out
of Chicago announced the results of their study showing that
expenditures in the U.S. for prescription drugs have doubled since
1993 to just over $101 billion, and are expected to double again by
2004. Television prescription drug advertising rose 70 % in 1999 to
$1.13 billion.

A report by the National Institute for Health Care Management dealt
with the cost of advertising prescription drugs. To read this report
see http://www.nihcm.org. It is a 44-page report full of facts and
data on prescription drugs. The Institute is a non-profit organization
supported by the insurance industry and government funds. With the
drug industry claiming that Research and Development costs are
soaring, this report shows that the cost of advertising for
prescription drugs on a percentage basis is growing faster than is the
percentage cost for R&D. In Europe direct-to-consumer advertising is
prohibited. The drug industry there is not allowed to spend more than
9 % of its revenue on advertising to health professions. At the same
time we must keep in mind that England has socialized medicine, so
their drug industry is operating under a different economic system
than is ours.

The report shows that the drug industry spent $17 billion on R&D and
product approval in the U.S. in 1998. The latest figures show that the
drug industry spent $20 billion for R&D and product approval in 1999.

The median profit for pharmaceutical companies in 1999 was 18.5 %,
which is the highest return for any industry. According to Stephen
Schondelmeyer, a professor at the University of Minnesota's College of
Pharmacy, " The 18.5 % profit is accounted (for) separately from the
20% they say they spend on R&D". The median for all other industries
is 4.4 %. According to Professor Schondelmeyer " On average, for every
$100 spent on a drug at the manufacturer's level, the actual cost of
making it is $10 to $15." He also stated: " A further $20 goes to R&D.
About $15 goes to taxes and administrative costs. About $30 goes to
advertising and marketing". We certainly do realize on the other hand
that very few drugs go on to become "blockbuster drugs" and the cost
and expenses for the failure is very high.

Direct to consumer advertising for prescription drugs was illegal
until 1997. By advertising the ailment instead of the brand name drug
the drug companies do not have to contend with mentioning the
potential side effects of their drug. The Food and Drug
Administration's "fair balance" guidelines set up in 1997 require
indicating the side effects only when the particular drug, not the
ailment is advertised.

The average price per prescription grew from $40.96 in 1999 to $45.27
in 2000. The number of prescriptions filled increased from 2.7 billion
in 1999 to 2.9 billion in 2000. In 1998 the average price per
prescription for new drugs (those introduced in 1992 or later) was
$71.49 more than twice the $30.47 for previously existing drugs. The
drug industry claims that Medicare coverage for prescription drugs
means a lowering of their profit margin and thus would result in a
lowering of their R&D expenditures. The drug industry sharply
increased its direct to consumer advertising in 1997 when the FDA
relaxed its guidelines for television advertising for pharmaceuticals.
It is estimated that the drug industry spent about $1.5 billion on
direct to the consumer advertising in 1998.

We feel that this direct advertising to the consumer has resulted in
more negatives than positives. Is the increased cost that we all are
bearing worth the supposed more knowledge that the consumer gains? We
feel these ads only serve to confuse the public more than they benefit
us.

A lobbying organization named Citizens for Better Medicare (CBM) spent
over $38 million advertising its opposition to former President
Clinton administration's prescription drug proposals. That is more
money spent on this campaign than any other organization. So far this
year the industry has contributed an estimated $11.2 million in
campaign contributions up from $4.8 million in 1992. According to a
Congress Watch study the drug industry has hired 297 registered
lobbyists since 1997 at a cost of $235.7 million. The latest figures
show the organization (CBM) is now spending about $1 million a week on
campaign-related issues.

Timothy Ryan the group's executive director has acknowledged that the
majority of the groups funding have come from the pharmaceutical
industry. Mr. Ryan previously had been the marketing director of the
Pharmaceutical Research and Manufacturers Association (PhRMA). CBM was
established as the lobbying and grass roots organizing arm of PhRMA.
"There isn't any other industy that has spent this kind of money" on
an election, says Kathleen Hall Jamieson, dean of the Annenberg School
for Communications at the University of Pennsylvania.

CBM was set up under Section 527 of the Internal Revenue Code, which
governs political activities, by nonprofit organizations. Click on the
IRS Web site (http://www.irs.gov) to see contributions and spending by
political groups organized under tax-code section 527. It does not
have to report its income or divulge its spending, so long as it
sticks to advocacy issues and not the individual candidates involved
in a particular election.

It has a web site for young people that originally offered $10 worth
of free calling card time urging the user to call your grandparents to
tell them to oppose the administration's prescription drug proposal.
They were so inundated with calls that they changed the offer to
eliminate the free $10 calling card, and replaced it with the call "on
our own dime" line. The group's advertising campaign has been focused
in the district where Democrats who favor Medicare coverage for
prescription drugs are running.

Please see our article "Ace Inhibitors and Beta-Blockers Fight Heart
Failure" in connection with costs and prescription drug benefits.

The following is a quote from a press release dated May 3, 2000 from
the National Institutes of Health's National Library of Medicine and
refers our readers to an excellent source of information about the
drugs we use.

"Recognizing the public's concern for good information about available
medicines, the National Library of Medicine has enhanced its consumer
health Web site, MEDLINE"plus", with extensive information about more
than 9,000 brand name and generic prescription and over-the-counter
drugs. The site (at

http://medlineplus.gov) gives information about side effects, dosing,
drug interactions, precautions, and storage for each drug. Because the
articles are intended for the use of patients, they are written in
non-technical language.

The information is provided in MEDLINE"plus" through a special
arrangement with the United States Pharmacopeia, located in Rockville,
Maryland. Specifically, MEDLINE"plus", now makes available the USP's
Drug Information (USP DI), Volume II, "Advice for the Patient." The
USP DI, one of the most authoritative sources for drug information in
the United States, is now in its 20th edition. Because it is in such
high demand, the "Drug Information" link is prominently featured on
every page of MEDLINE"plus".

MEDLINE"plus" links to authoritative information on nearly 400 health
topics, and, although just 18 months old, this site is used by
consumers and health professionals some 1.3 million times each month.
MEDLINE"plus" also connects users to medical dictionaries, lists of
doctors and hospitals, and "Health Topic" pages that have links to
carefully selected resources on subjects such as diseases, fitness,
and nutrition. In April, MEDLINE"plus" added the "adam.com" Medical
Encyclopedia, which contains articles on health topics as well as an
extensive collection of medical illustrations.

The National Library of Medicine, which is the world's largest library
of the health sciences, is a part of the National Institutes of Health
in Bethesda, Maryland. The Library has an extensive Web site at
www.nlm.nih.gov that provides a great variety of information for the
general public and for health professionals. The site requires no
registration and users are assured of complete privacy."

For an excellent article on the topic of prescription drug costs
please see Jeanne Findlater's article "The Cents and Nonsense of High
Cost Prescription Drugs"-

FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL SUGGESTIONS WHEN
SELECTING A NURSING HOME SEE OUR ARTICLE

"How to Select a Nursing Home"

By Allan Rubin
Updated February 27, 2005

http://www.therubins.com

To e-mail: hrubin12@nyc.rr.com or rubin@brainlink.com

TheRubins.com

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