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Can You Guess Which Pharma Giant Spends $1 Billion-Plus a Year On Direct-To-Consumer Ads?

By Motley Fool Staff – Jul 22, 2016 at 8:26AM

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Among drugmakers, this one is the biggest spender -- by far -- in consumer advertising. Does this practice help or hurt consumers?

In 2014, pharma giant Pfizer (PFE 1.07%) spent more than $1 billion on ads in an effort to raise consumer awareness for its drugs. That fact raises an interesting moral question: Should this type of marketing be allowed?

In this clip from The Motley Fool's Industry Focus: Healthcare, contributor Brian Feroldi joins analyst Kristine Harjes to discuss the pros and cons of allowing big pharma companies to market their products directly to consumers.

A transcript follows the video.

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This podcast was recorded on Jul. 13, 2016.

Kristine Harjes: Another element to this story about how healthcare companies market their drugs, aside from just having representatives that talk to healthcare providers and doctors, you also have direct-to-consumer advertising. This is something that's pretty unique to the U.S. America is the only major market to allow direct-to-consumer -- DTC -- ads of prescription drugs. One of the companies that is really huge in this is Pfizer, which in 2014, was the first pharma to break $1 billion in annual DTC ad spend. The runners up, by the way, were about a third of that spend. They are the Goliath of the TV commercial area. This is another interesting moral question -- should these companies be allowed to put a commercial on TV for a drug?

Brian Feroldi: You see both sides of it. On the one hand, raising awareness for a disease state or drug, that could be a good thing. If a patient sees a commercial and says: "Hey, I might have that," and they go talk to their doctor and they can get help, you could argue that's a good thing. But on the flip side, it does hold potential to create artificial demand for a drug, where you could imagine a patient walking into a doctor's office and saying, "Hey, I saw this on TV and I want it." The doctor might not even think they're a good candidate for it, but they could feel some pressure to prescribe it just to make the patient happy.

Brian Feroldi has no position in any stocks mentioned. Kristine Harjes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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