FTC Staff Comment Before the Food and Drug Administration In the Matter of Direct-to-Consumer Promotion

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
BEFORE THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES
FOOD AND DRUG ADMINISTRATION
In the Matter of
Direct-to-Consumer Promotion; Public Hearing
Docket No. 95N-0227
Comments of the Staff of
the Bureau of Consumer Protection
and the Bureau of Economics
of the Federal Trade Commission
January 11, 1996(1)
I. Introduction.
The Food and Drug Administration (FDA) has requested comments regarding the promotion of prescription drug
products directly to consumers (DTC) through print, broadcast, and other media. Among other things, the agency
announced that it “is particularly interested in exploring whether, and, if so, how, the agency’s current regulatory
approach should be modified.(1) The staffs of the Bureau of Consumer Protection and the Bureau of Economics of
the Federal Trade Commission (FTC) offer the following comments to assist the FDA in its deliberations,(2) based on
our experience in analyzing the effects of information in consumer product markets and in considering legal
requirements that address information issues.
The FTC enforces the Federal Trade Commission Act, which among other things prohibits deceptive or unfair
practices in or affecting commerce. One of the FTC’s primary responsibilities is to enforce the law prohibiting
deceptive practices in national advertising.(3) The FTC considers the prevention of deceptive health-related
advertising claims to be of utmost importance, and has taken action in numerous cases involving deceptive health-
related claims about OTC drugs,(4) food products,(5) dietary supplements,(6) and medical devices.(7) In
implementing its mandate, the FTC has developed considerable expertise in the role of advertising in the consumer
information environment.
The staff of the Commission also has experience examining the effects of laws affecting advertising on market
performance,(8) including in the prescription drug market.(9) While important differences between advertising for
prescription drugs and advertising for other products might lead to different approaches, we believe that the staff’s
experience, particularly regarding marketing and economic issues, has a bearing on many of the DTC advertising
issues on which the FDA is seeking comment.
Truthful and non-misleading advertising can help consumers manage their own health care. Advertisements can, for
example, provide timely information regarding medical advances, remind consumers about good health care
practices, and supply information needed by consumers to understand and evaluate their physician’s
recommendations. On the other hand, deceptive or misleading advertisements in the prescription drug area can
impose particularly high costs on consumers. Whether or not a particular advertisement might mislead consumers will
turn on the specific facts associated with that ad (and a determination of the claims being made). Any analysis of the

likelihood of deception would therefore depend on a case by case evaluation. The FTC staff believes that the
Commission’s Deception Policy Statement and its Statement on Advertising Substantiation(10) may assist the FDA in
evaluating prescription drug advertisements.
II. The Potential Effects of DTC Advertising on Consumers and the Marketplace.
Assessments of DTC regulatory options are likely to depend on one’s understanding of DTC advertising’s effects on
consumers and the marketplace. In this section we consider this issue. First, we consider the incentives to provide
consumers with information about drug therapies. Second, we describe the unique role of advertising, in general, and
of DTC prescription drug advertising, in particular, in the consumer information environment. Third, we describe the
potential effects of DTC advertising on competition. Finally, we consider how regulations can be designed to
encourage the potentially beneficial effects of advertising while discouraging its potentially harmful effects.
A. Incentives to Provide Consumers with Information About Alternative Drug
Therapies.
We believe this is a particularly good time to examine the potential value of DTC advertising. With the growth of
managed care organizations, consumers are expected to become more actively involved in their health care
decisions and to demand more information on alternative therapies.(11) The recent growth of DTC pharmaceutical
advertising expenditures(12) is consistent with the view that consumers are demanding more product information.
Substantial information about drug therapies is provided to consumers by independent parties. Newspapers report on
new drugs,(13) books describe drug options,(14) magazines discuss alternative therapies,(15) and public health
organizations provide a wealth of information.(16)
Despite the existence of these sources, economic reasoning suggests that advertising can be an important
supplemental source of information.(17) Information, like most goods, is costly to provide. However, in contrast to
most products, information is not used up when it is consumed, and it is often possible to use information without
paying for it, that is, to “free ride.” As a result, markets may tend to provide consumers with less than the optimal
amount of information.
Advertising can reduce this problem. Firms will provide health information to consumers when it is profitable to do so.
Profitability depends on several factors that affect the marginal benefits and costs of advertising. For example,
extensive disclosure requirements can substantially increase the cost of advertising, thereby decreasing a firm’s
incentive to advertise.(18) (Of course, such disclosures may nonetheless be needed sometimes to prevent
deception).
Firms have strong incentives to provide information about disease conditions and possible treatments if they can
associate the information with products they sell. Although firms with relatively large market shares may find it
profitable to provide advertising messages that do not make such an association, smaller competitors are less likely
to find such advertising profitable, due to the “free-riding” phenomenon.
Incentives to advertise are also enhanced when firms can initiate new campaigns quickly. For example, the sooner
information on product improvements reaches consumers, the sooner firms can begin through sales to recoup
research and development investments and advertising expenditures. Similarly, the incentive to advertise is likely to
be greater when firms can respond rapidly to advertising by competitors.
B. Prescription Drug Advertising as a Unique Source of Some Information that Can
Enhance Consumer Welfare.

Prescription drug advertising, like any type of advertising, represents only one component of the total consumer
information environment, which includes the media, package inserts, reference books, doctors, and pharmacists.
Advertising, like any of these components, is better at some tasks than others. For example, broadcast
advertisements are relatively good for disseminating short bits of information to large audiences but not for providing
complex information. Complex information is often disseminated more effectively at another point in the product
consideration and purchasing process, such as through labeling at the point of sale.(19) Although reference books
that describe drug characteristics are useful, they may lack information about recent innovations and may not reach a
wide audience. In contrast, advertising can inform about product innovations as soon as they are brought to market.
Advertising can also remind people of information that they might already know but that has faded from memory.
Different forms of advertising may have different advantages and disadvantages as means of communicating
information. Complex information is often communicated more effectively through print media than through broadcast
media. Internet advertising may be particularly efficient at reaching small sub-populations with a strong interest in
certain types of drugs.(20)
Obviously, one concern with advertised information is that manufacturers will be inclined to favor their products.(21)
Although some forces weigh against this outcome,(22) they may be insufficient to prevent firms from making
unfounded claims, whether intentionally or inadvertently. Deceptive claims in the prescription drug area can have
serious consequences.
Although prescription drug advertising shares many characteristics of advertising in other markets, prescription drugs
have several characteristics that make the analysis of prescription drug advertising to consumers distinctive. For
example, product safety and efficacy is a particularly important issue in this advertising market. At the product level,
this concern is addressed by the requirement that all prescription drugs be pre-approved by the FDA for safety and
efficacy.
Concerns about product safety and efficacy are reflected in control of access to prescription drugs. Doctors must
prescribe them, and they must be dispensed by pharmacists. These controls should help ensure that inappropriate
drugs are not used.
Advertising may make consumers aware of more convenient or otherwise more desirable versions of drugs than
those they currently use. Advertising may encourage consumers to see a doctor for advice about conditions they
might have previously ignored or for further information about conditions already being treated. Advertising may
cause consumers to inquire about diagnostic tests that might not otherwise be performed. Better informed consumers
will be better able to understand and discuss their individual needs with their doctors and pharmacists. Thus,
advertising can help consumers make decisions about their health care and health care costs.
C. Potential Effects of Prescription Drug Advertising on Price and Quality
Competition
Advertising is an important catalyst for price and quality competition. Advertising can put downward pressure on
prices by spurring competition among alternative therapies.(23) To the extent that prescription drugs compete with
OTC drugs,(24) prescription drug advertising potentially can lead to lower average prices for both product categories.
We recognize, however, that the ultimate effect is likely to depend on the evolution of the health care market and on
the individual characteristics of drug classes and disease conditions.(25)
Quality competition can also be motivated by advertising. Advertising can help foster product improvements by
delivering information to consumers on quality variables that they may not otherwise know about. If consumers prefer
products with the advertised qualities and receive prescriptions for these products after consulting with their doctors,
then their demand for the advertised products is reflected in sales and the market reflects consumer preferences.
D. Considerations Regarding Regulation.

We believe that truthful and non-deceptive DTC advertising can contribute to consumers’ health information
environment and consumer welfare. A review of some recent DTC advertising suggests beneficial outcomes are
likely, because many advertisements focus on the types of claims that we would expect to help consumers, such as,
for example, improved convenience and cost advantages. In addition, recent consumer research evidence suggests
that DTC advertisements are likely to encourage people to seek advice from their doctors,(26) which may result in
improved health care.
In a regulatory scheme for DTC advertising, therefore, we would encourage balancing the benefits and the risks of
allowing pharmaceutical manufacturers greater latitude in their advertising. In particular, it is important to protect
consumers from deceptive information but not to stifle truthful information that could benefit consumers. As discussed
below, we believe that the net benefits of DTC advertisements can be increased by limiting current disclosure
requirements and by adjusting disclosure requirements according to the characteristics of different advertising
venues.
III. The FTC’s Approach to Advertising.
During the FDA’s public hearings on October 18 and 19, 1995, regarding DTC prescription drug advertising, many
commentators suggested that the FDA consider adopting an approach similar to that used by the FTC.(27) In light of
these suggestions, it may be helpful for us to describe the framework used by the FTC concerning deceptive
advertising.
The Commission’s policy with respect to deceptive advertising is set out in its Deception Policy Statement(28) and its
Statement on Advertising Substantiation.(29) An advertisement is considered deceptive if it contains a representation
or omission that is likely to mislead consumers acting reasonably under the circumstances, and the representation or
omission is material, that is, it is likely to affect consumers’ decisions regarding purchase or use of a product.(30)
Thus, the FTC’s approach involves identifying the claims that are conveyed by an advertisement, both expressly and
by implication, and determining whether those claims are truthful and substantiated.(31)
In analyzing an advertisement, the FTC focuses on the net impression it conveys rather than on the individual
elements of the ad in isolation. Because advertisements can mislead consumers by what they do not say as well as
by what they do say, the omission of material information may also render an advertisement deceptive in some
circumstances. Deception can occur through omission of information when that information is necessary to prevent
an affirmative representation from being misleading(32), or simply by remaining silent, if doing so constitutes an
implied but false representation.(33) The Commission has made clear, however, that “[n]ot all omissions are
deceptive, even if providing the information would benefit consumers.(34) An omission is considered deceptive only if
the absence of the information causes the advertisement to convey an inaccurate impression about a material
fact.(35)
The FTC’s focus when analyzing the adequacy of disclosures is on their effectiveness in communicating the
necessary information in the context of the advertising at issue. When disclosure of information is necessary to
prevent an advertisement from conveying an inaccurate impression, the mere physical presence of the information
may not be sufficient to prevent the ad from being considered deceptive.(36) Thus, the information must be included
in a manner that is calculated to be noticed, read (or heard, if orally presented), and comprehended by
consumers.(37)
IV. Considering DTC Prescription Drug Advertising Issues in Light of the FTC’s
Approach
A. The “Brief Summary.”

The FDA in its Federal Register Notice asked whether, and if so, how, the “brief summary” disclosure requirements
for prescription drug advertising should be modified in the context of consumer directed advertising for prescription
drugs.
Under an FTC deception analysis, the primary questions would be whether the brief summary requirements are
necessary to prevent deception, and, if so, whether they effectively communicate the necessary information to
consumers.(38) Pursuant to the FTC’s deception authority, this would be a case-by-case analysis, as the focus would
be on the net impression conveyed by a specific advertisement, and whether any or all of the brief summary
requirements would be necessary to prevent that advertisement from conveying a deceptive impression.(39)
The FTC’s experience in enforcing the law pertaining to deception indicates that it is often difficult to effectively
communicate information to consumers. More complicated messages are more difficult to convey to consumers in an
understandable manner. Fine print disclosures, whether in print or broadcast advertising, are often insufficient to
effectively communicate important information.(40)
The “brief summary” that currently appears in consumer directed prescription drug advertising is obviously highly
technical, complicated, and lengthy. It is often presented in fine print, in language that is designed for health care
professionals rather than lay persons. We believe that the information contained therein is therefore unlikely to be
readily focused on and understood by consumers.
Moreover, if the “brief summary” included information that was necessary to prevent deception or other consumer
injury, we would be concerned that it would not be effectively communicated by the current format. The sheer volume
of information required to be disclosed may itself contribute to a reduced comprehension of any such specific
important information.(41)
Alternative means could be considered for ensuring consumer access to information that is important for consumers
to have but that is not necessary to prevent deception or injury. For instance, certain kinds of DTC advertisements
could provide an “800” number for consumers to call for further information(42), or an alternative source for
consumers to obtain the information. They could also encourage consumers to ask their doctors about product risks
and benefits and to ask their pharmacists for package insert information.
B. Tailoring Regulation to the Advertising Medium.
The FDA also asked whether broadcast advertisements should be subject to the same “brief summary” requirements
as advertisements in other media.
Differences among media may affect the likelihood of deception from advertising claims and, therefore, the
appropriateness of particular approaches to preventing deception. Television advertising typically is presented in
thirty to sixty second lengths, although fifteen and even ten second advertisements are not uncommon. The brevity of
television advertising makes it very difficult to include lengthy or complex disclosures, or to do so in a comprehensible
manner.(43) Print advertising, on the other hand, is more conducive to communicating relatively complex information
than TV advertising because people can read print advertisements at their own speed, and even re-read the
information if so inclined. Similarly, advertising on the Internet can be read at one’s own pace and can be saved or
printed for future reference. Thus, a claim read quickly in a broadcast advertisement might present a different
likelihood of deception than does the same claim appearing in a print or on-line format. Given the variety of media in
which advertising appears, it may be appropriate in designing measures to prevent deception, such as disclosure
requirements, to take into account practical differences among various advertising venues.(44) For instance, the FTC
has recognized these differences and in some cases in which disclosures have been imposed has designed
abbreviated versions for use in broadcast media.(45) If necessary, abbreviated disclosures could be supplemented
through requirements that more detailed information be made available on request and that consumers be made
aware of this option.

The FDA has also requested comments regarding the regulation of new advertising technologies, such as the
Internet. Although developing information technologies present new possibilities for the innovative delivery of valuable
information to consumers, these technologies can be used to deceive consumers.(46) Although new media such as
the Internet clearly present new challenges(47) with respect to monitoring and enforcing laws against deception, we
believe that the core principles underlying the FTC’s deception policy apply as well to these developing technologies
as to more traditional advertising media.
C. Identifying the Source of an Advertisement.
The FDA also seeks comment concerning infomercials and manufacturer-supported DTC promotions that appear to
be sponsored by independent third-party services.
Consumers’ evaluation of information may be affected by an inaccurate perception regarding its sponsorship. A
potential for deception therefore exists when consumers do not know that what appears to be a news broadcast or
other programming is really an infomercial, or that what appears to be independently supplied information is really
supplied by a product’s manufacturer.
This concern about infomercials underlies numerous actions in recent years by the FTC, challenging the formats
used as deceptive.(48) In these cases, the FTC typically barred advertisers from misrepresenting the nature of the
“program” and required them to disclose, at the beginning of an infomercial and immediately before any product
ordering information, that what consumers are watching is a paid commercial.(49)
The FTC also has addressed the third-party endorsement issue, both in its Guides Concerning the Use of
Endorsements and Testimonials in Advertising(50) and in law enforcement actions. The Guides suggest that the
connections between an endorser and a seller of an advertised product that “might materially affect the weight or
credibility of the endorsement (i.e., the connection is not ?reasonably expected by the audience’),” should be
disclosed.(51) The FTC has applied the standards described in the Guides in particular cases, involving endorsers
that were business associates of the marketer,(52) an endorser that was an officer or director,(53) an endorser that
was an employee of the advertiser,(54) and an endorser that was a product distributor.(55) The concern in these
cases is that the endorsers had an undisclosed financial interest in promoting the products. Again, the likelihood of
deception depends on the specifics of an individual ad, and the analysis is therefore conducted on a case- by-case
basis.
D. Regulation of Price Advertising.
As the FDA reviews its advertising regulations, one issue not mentioned in the Notice may also deserve attention.
The FDA’s existing brief summary requirements may have the inadvertent effect of unnecessarily restricting the
dissemination of price information. While the FDA regulations exempt certain types of price claims from the brief
summary requirement, the exemption is narrow(56) and apparently would apply only to advertisements of the price of
a specific quantity of a drug, and not, for instance, to comparative price claims, coupons or other forms of price
reduction information.
The brief summary requirement adds to the cost of advertising and may be expected therefore to reduce the amount
of advertising. With respect to price advertising, therefore, the brief summary requirements may result in less price
competition. Price advertising can result in lower prices for consumers.(57) We therefore suggest that FDA evaluate
whether its limitations on the exemption for price claims are necessary and desirable.
(1) These comments are the views of the staff of the Bureaus of Consumer Protection and Economics of the Federal
Trade Commission. They do not necessarily represent the views of the Commission or any individual Commissioner.
Inquiries regarding this comment should be directed to Susan Cohn (202) 326-3053, Bureau of Consumer Protection
or Jan Pappalardo (202) 326-3380, Bureau of Economics.

(1)” 60 Fed. Reg. 42,583 (Aug. 16, 1995).
(2) These comments are the views of the staffs of the Bureaus of Consumer Protection and Economics of the Federal
Trade Commission. They do not necessarily represent the views of the Commission or any individual Commissioner.
(3) 15 U.S.C. §§ 45, 52-57. The FTC and FDA have overlapping jurisdiction with respect to the advertising, labeling,
and promotion of foods, over-the-counter drugs, cosmetics and medical devices. Under a long-standing liaison
agreement between the agencies, the FDA exercises primary responsibility for regulating the labeling of these
products, while the FTC has primary responsibility for enforcing laws against false or misleading advertising of these
products. Working Agreement Between FTC and Food and Drug Administration, 4 Trade Reg. Rep. (CCH) ¶ 9,851
(1971).
In 1962 Congress limited a portion of the FTC’s authority over prescription drug advertising under sections 12-17.
Specifically, section 502(n) of the Food, Drug and Cosmetic Act precludes FTC jurisdiction under sections 12-17 of
the FTC Act with respect to three items: drug name, formula, and summary of effectiveness and consequences of
use. The Food, Drug and Cosmetic Act does not address FTC jurisdiction under these sections over statements other
than those that fall into these three categories, nor does it affect the FTC’s basic jurisdiction over advertising,
including prescription drug advertising, under section 5 of the FTC Act. The 1971 liaison agreement between the two
agencies reflects the understanding that the FDA would exercise primary responsibility for the truth or falsity of
prescription drug advertising. See Letter from the Federal Trade Commission to the Honorable John C. Dingell,
August 15, 1983, for further discussion of the FTC’s shared jurisdiction with FDA regarding prescription drug
advertising.
(4) See, e.g., Johnson & Johnson Consumer Products, Inc., File No. 9433277 (Oct. 11, 1995) (proposed consent);
Olsen Laboratories, Inc., C-3556 (Feb. 6, 1995); FTC v. Pantron 1 Corp., No. 88-6696 RG(JRx) (C.D. Cal. July 27,
1992) (judgment), rev’d in part and aff’d in part, (9th Cir. Aug. 25, 1994); St. Ives Laboratories, Inc., C-3366 (Jan. 24,
1992); U.S. v. Sterling Drug, Inc., No. CA 90-1352 (D.D.C. June 12, 1990) (consent decree); Walgreen Co., 109
F.T.C. 156 (1987) (consent); Thompson Medical Co., 104 F.T.C. 648 (1984), aff’d, 791 F.2d 189 (D.C. Cir. 1986),
cert. denied, 479 U.S. 1086 (1987).
(5) See, e.g., Eggland’s Best, Inc., C-3520 (Aug. 15, 1994) (consent); Gracewood Fruit Co., C-3470 (Oct. 26, 1993)
(consent); Pompeian, Inc., C-3402 (Oct. 27, 1992) (consent); Campbell Soup Co., D. 9223 (Aug. 18, 1992) (consent);
Pacific Rice Products, Inc., C-3395 (Aug. 17 1992) (consent); Bertolli U.S.A., Inc., C- 3396 (Aug. 17, 1992) (consent).
(6) See, e.g., Home Shopping Network, Inc., D. 9272 (Mar. 3, 1995) (complaint issued; matter in administrative
litigation); Bee-Sweet, Inc., C-3550 (Jan. 17, 1995) (consent); Schering Corp., D. 9232 (Sept. 16, 1991) (Initial
Decision), (Oct. 31, 1994) (consent); FTC v. Redhead, No. 93-1232-JO (D. Ore. June 20, 1994) (stipulated
permanent injunction); U.S. v. General Nutrition, Inc., No. 94-686 (W.D. Pa. Apr. 28, 1994) (consent); Miles, Inc., 114
F.T.C. 31 (1991) (consent); General Nutrition, Inc., 111 F.T.C. 387 (1989) (consent); FTC v. PharmTech Research,
Inc., 576 F. Supp. 294 (D.D.C. 1983) (preliminary injunction), 103 F.T.C. 448 (1984) (consent).
(7) See, e.g., Lifestyle Fascination, Inc., C-3513 (Aug. 5, 1994) (consent); FTC v. LaserVision, Inc., No. 94-1691 WJR
(C.D. Cal. Mar. 15, 1994) (stipulated permanent injunction); In re Dahlberg and the FTC, No. 4-94-CV-165 (D. Minn.
Nov. 21, 1995) (consent decree); Numex Corp., C-3463 (Oct. 7, 1993) (consent); Conair Corp., C-3431 (June 14,
1993) (consent); Viral Response Systems, Inc., D. 9245 (July 31, 1992) (consent); Haverhills, C- 3322 (Jan. 25,
1991) (consent); Removatron International Corp., 111 F.T.C. 206 (1988), aff’d, 884 F.2d 1489 (1st Cir. 1989); Sun
Industries, Inc., 110 F.T.C. 511 (1988) (consent).
(8) Relevant FTC staff research includes: P. Ippolito & A. Mathios, Health Claims in Advertising and Labeling: A
Study of the Cereal Market (1989); J. Calfee and J. Pappalardo, How Should Health Claims for Foods Be Regulated?
An Economic Perspective (1989); M. Lynch et al., Experimental Studies of Markets with Buyers Ignorant of Quality
Before Purchase: When Do ?Lemons’ Drive Out High Quality Products (1986).

(9) See A. Masson & R. Steiner, Generic Substitution and Prescription Drug Prices: Economic Effects of State Drug
Product Selection Laws (1985); Drug Product Selection, FTC Staff Report (1979); R. Bond & D. Lean, Sales,
Promotion and Product Differentiation in Two Prescription Drug Markets (1977); and Prescription Drug Price
Disclosures, FTC Staff Report (1976).
(10) See infra notes 28 and 29.
(11) See H. W. Singer, Direct-to-Consumer Advertising, 14 Med. Ad News 10, 30 (October 1995); W. Borow, The
AMA Explains Its About-Face on Direct-to-Consumer Advertising, Med. Marketing & Media, at 68, September 1993.
(12) Singer, supra note 11, at 30. According to the trade press, drug companies spent a total of $11.6 million on DTC
campaigns in 1989. In 1994, they spent $242.4 million. During the first five months of 1995, they spent $141.2 million.
(13) See, e.g., J. Schwartz, FDA Approved Drug for Treatment of AIDS: 3TC Compound Used in Combination with
AZT, Washington Post, Nov. 21, 1995, at A3.
(14) Three prescription drug reference books were listed among the thirty-nine top selling reference books in 1994:
The Physician’s Desk Reference Family Guide to Prescription Drugs (205,000 copies), The 1994 Physicians’ Desk
Reference (110,000 copies), and The Essential Guide to Prescription Drugs 1994 (52,948 copies). See Publishers
Weekly, March 7, 1994, at S26.
(15) See, e.g., Your Health: New Treatment for Ulcers — and Other Stomach Pains, Consumer Reports, Aug. 1995,
at 552-553, (comparing ulcer treatments using antibiotic therapies to ulcer treatments using H2 blockers).
(16) See, e.g., Washington Post Magazine, Nov. 12, 1995 (insert between pages 26 and 27 sponsored by the
American Cancer Society and the Ad Council urging women to get mammograms and providing an “800” number for
people to call for further information).
(17) Many scholars have discussed prescription drug advertising from an economic and marketing perspective. See,
e.g., M. J. Sheffet and S. W. Kopp, Advertising Prescription Drugs to the Public: Headache or Relief? 9 J. Pub. Pol’y
& Marketing 42 (1991); A. Masson, “Direct-to-Consumer Advertising: A Continuing Controversy,” in Enhancing
Consumer Choice: Proceedings of the Second International Conference on Research in the Consumer Interest p.
159-168 (R. N. Meyer ed., 1991); J. H. Beales, III, Economic Analysis and the Regulation of Pharmaceutical
Advertising, 24 Seton L. Rev. 1370 (1994).
(18) For an extensive discussion of the costs and benefits of disclosure requirements see Consumer Information
Remedies: Policy Review Session, Staff Briefing Book to the Federal Trade Commission (1979).
(19) The FDA has recently issued a proposed rule intended to increase the availability to consumers of information
accompanying dispensed prescription drugs. 60 Fed. Reg. 44,182 (Aug. 24, 1995). Changes in the availability of
extensive product information at the point of sale are likely to affect the role of advertising in the consumer’s
information environment.
(20) For example, according to the trade press, cyberspace provides an efficient means of communicating to people
with Lou Gehrig’s disease. See P. Weisz, Out of the Lab and into the Screening Room: Direct-to-Consumer Ads are
Now at $200 Million and Growing, Brandweek, at 31, April 18, 1994.
(21) Survey evidence suggests that most consumers recognize this potential and therefore tend to evaluate
advertising with skepticism. Nevertheless, surveys also suggest that most consumers also find advertising to be a
valuable source of information. See J. Calfee & D. Ringold, The 70% Majority: Enduring Consumer Beliefs About
Advertising, 13 J. Pub. Pol’y & Marketing 228 (1994).

(22) Manufacturers whose success depends upon their good reputations may refrain from exaggerated claims for
fear of tarnishing their reputations. Exaggerated claims can be challenged through counter-advertising by
competitors, or brought to light by other information suppliers, especially the media. In addition, competitors can raise
challenges through Lanham Act actions (15 U.S.C. § 1125(a)), or through complaints filed with the National
Advertising Division of the Council of Better Business Bureaus, an industry self-regulatory body. See, e.g., A. Mathios
and M. Plummer, Regulation of Advertising: Capital Market Effects, FTC Bureau of Economics Staff Report (1988).
(23) See, e.g., L. Benham, The Effect of Advertising on the Price of Eyeglasses, 15 J.L. & Econ. 337 (1972); J.F.
Cady, An Estimate of the Price Effects of Restrictions on Drug Price Advertising, 14 Econ. Inquiry 493 (1976); K.B.
Leffler, Persuasion or Information? The Economics of Prescription Drug Advertising, 24 J.L. & Econ. 45 (1981); J.
Cady, An Estimate of the Price Effects of Restrictions on Drug Price Advertising, 14 Econ. Inquiry 493 (1976); W.
Jacobs et al., Improving Consumer Access to Legal Services: The Case for Removing Restrictions on Truthful
Advertising, Staff Report to the Federal Trade Commission (1984).
(24) The degree of competition between OTC and DTC drugs likely varies across therapeutic categories. The level of
competition is likely to be particularly strong in categories where some prescription drugs are switched to OTC status.
For a description of this process see P. Temin, Realized Benefits from Switching Drugs, 35 J.L. & Econ. 351 (1992).
(25) Some commentators believe that DTC advertising will increase prescription drug prices. See, e.g., Eric P.
Cohen, Sounding Board: Direct-to-the-Public Advertisement of Prescription Drugs, 318 New Eng. J. Med. 373
(February 11, 1988). One argument is that advertising costs will be passed on to the consumer, resulting in higher
prices. Although price effects cannot be predicted definitively a priori, we believe that DTC advertising may generally
reduce drug prices. First, as discussed above, advertising can trigger competition among alternative therapies, which,
in the long run, should result in lower average prices for the therapeutic category, assuming all else (including quality)
remains constant. Second, increases in DTC advertising expenditures might not indicate that total promotional
expenditures have increased. For example, resources devoted to consumer advertising may partially displace
resources devoted to professional advertising. (The trade press suggests that such substitutions might occur. See
Singer, supra note 11, at 32.) Finally, even if overall advertising expenditures for a product increase, advertising costs
per unit sold may decline.
(26) See S. Everett, Lay Audience Response to Prescription Drug Advertising, J. Advertising Res. 43-49 (April/May
1991); M. Perri and W. M. Dickson, Consumer Reaction to a Direct-to- Consumer Prescription Drug Advertising
Campaign, 8 J. Health Care Marketing 66 (June 1988).
(27) See, e.g., testimony of Nancy Buc, Mary Jane Sheffet, and John F. Kamp at FDA Public Hearing on Direct-to-
Consumer Promotion (October 18, 1995).
(28) FTC Policy Statement on Deception, Cliffdale Assocs., 103 F.T.C. 110, 174 (1983), Letter from the Commission
to Chairman John D. Dingell, Committee on Energy and Commerce, U.S. House of Representatives, Oct. 14, 1983
(“Deception Statement”).
(29) FTC Policy Statement on Advertising Substantiation, 49 Fed. Reg. 30,999 (Aug. 2, 1984), Thompson Medical
Co., 104 F.T.C. 648, 839 (1984)(“Substantiation Statement”).
(30) Deception Statement, supra note 28, at 183. For prescription drugs, unlike most other consumer products,
consumers cannot make and act on purchase decisions individually. The requirements to obtain a prescription from a
practitioner and have it filled by a pharmacist introduce checks in the system that may reduce the likelihood of
consumer harm from deceptive DTC advertising.
(31) Under the Commission’s substantiation policy, advertisers must have substantiation for all objective claims
before the claims are disseminated. The type and amount of substantiation required depends on the specifics of each
case. If an advertisement represents, directly or by implication, that a claim is based on a particular type or amount of

substantiation, the claim must in fact be supported by at least that type and amount of evidence. If the advertisement
contains no such specific representation, the appropriate level of substantiation is determined by consideration of a
number of factors: 1) the type of product advertised; 2) the type of claim; 3) the benefits of a truthful claim; 4) the
ease of developing substantiation for the claim; 5) the consequences of a false claim; and 6) the amount of
substantiation that experts in the relevant field believe is necessary. See Pfizer, Inc., 81 F.T.C. 23, 64 (1972);
Thompson Medical Co., 104 F.T.C. 648, 813, 821 (1984), aff’d, 791 F.2d 189 (D.C. Cir. 1986), cert. denied, 479 U.S.
1086 (1987); Bristol-Myers, 102 F.T.C. 21, 321 (1983), aff’d, 738 F.2d 554 (2d Cir. 1984), cert. denied, 469 U.S. 1189
(1985). See also Substantiation Statement, supra note 29, at 840.
(32) Deception Statement, supra note 28, at 175, fn.4; see also International Harvester Co., 104 F.T.C. 949, 1057
(1984); see, e.g., Campbell Soup Co., D. 9223 (Aug. 18, 1992) (consent); North American Philips Corporation, 111
F.T.C. 139 (1988).
(33) International Harvester, 104 F.T.C. at 1058.
(34)” Deception Statement, supra note 28, at 175, fn.4; see also International Harvester, 104 F.T.C. at 1059.
(35) Deception Statement, supra note 28, at 175, fn.4.
(36) See, e.g., Haagen-Dazs, Inc., C-3582 (June 2, 1995) (consent) (advertising that contained an asterisk and some
qualifying information in fine print challenged as deceptive).
(37) In orders the FTC generally has required that disclosures be made “clearly and prominently,” or “clearly and
conspicuously.” See, e.g., Nutri/System, Inc., C-3474 (Dec. 22, 1993) (consent); Diet Center, Inc., C-3476 (Dec. 22,
1993) (consent). In some instances the FTC provides specific instructions for the required disclosure presentation.
See, e.g., Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992, 16
C.F.R. § 308; European Body Concepts, C-3590 (June 23, 1995) (consent); Eggland’s Best, Inc., C-3520 (Aug. 15,
1994)(consent).
(38) In the context of prescription drug advertising to health care professionals, the information included in the brief
summary may serve a different purpose from that in DTC advertising.
(39) Under the FDA’s “fair balance” requirements advertisers must include, in the text of an advertisement, balanced
information regarding a drug’s benefits and risks. To the extent that this requirement assures that information that is
important for consumers to know in order to avoid deception or other harm is presented in the body of an ad, it may
reduce the need for the extensive brief summary.
(40) See, e.g., Foxman et al., Disclaimer Footnotes in Ads: Discrepancies between Purpose and Performance, 7 J.
Pub. Pol’y & Marketing 127, 134 (1988) (miscomprehension level after exposure to smaller-print footnotes is higher ).
(41) See Murray et al., Public Policy Relating to Consumer Comprehension of Television on Commercials: A Review
and Some Empirical Results, 16 J. Consumer Pol’y 145, 155, 160-161 (1993) (demonstrating that the number of
words in a disclosure is negatively correlated with comprehension); Murphy & Richards, Investigation of the Effects of
Disclosure Statements in Rental Car Advertisements, 26 J. Consumer Aff. 351, 355-356 (1992). Murphy & Richards
find that if the amount of information presented exceeds consumers’ ability to process it, the quality of consumer
decision-making may be negatively affected. Murphy and Richards further state that “[a]lthough any efforts by
regulators to facilitate informed decision-making may be laudable, failure to ensure that the chosen method of
presentation is appropriate for consumer use can make those regulations worthless or even detrimental to consumer
interests. If consumers are unable to understand or recall the information in the legally mandated form another
disclosure technique...may be more efficacious.” Id. at 373 (emphasis in original).

(42) Some evidence suggests that consumers are receptive to “800” numbers in connection with the promotion of
prescription drugs. Upjohn reportedly received calls from more than one million people through an “800” number
appearing in its Depo- Provera ads, while three million have used an “800” number provided by the company in ads
for Rogaine. See Singer, supra note 11, at 14, 35.
(43) See Murray et al., supra note 41, at 155, 164 (lack of viewer opportunity to process information disclosed in
television advertising can contribute to reduction in comprehension).
(44) Id. at 165 (noting low comprehension rates for disclosures in television advertising and suggesting consideration
of different roles for different media).
(45) E.g., Southwest Sunsites, Inc., 105 F.T.C. 7 (1985), aff’d, 785 F.2d 1431 (9th Cir.), cert. denied, 479 U.S. 828
(1986)(brief disclosure regarding risk in land purchases required for radio, television, and short print advertisements;
lengthier disclosures required in larger print advertisements, promotional materials, and oral sales presentations).
See Murphy & Richards supra note 41, at 371 (finding that a shortened disclosure regarding rental car restrictions
provided adequate communication).
(46) In this regard, the FTC recently hosted a workshop on “Consumer Protection and the Global Information
Infrastructure” (see FTC press release, March 16, 1995) and consumer protection issues were part of the recent
hearings on global commerce and innovation (see FTC press release, September 26, 1995).
(47) One challenging issue posed by these new media is the difficulty of distinguishing between the non-commercial
information or entertainment content and an advertising component. Unlike, for instance, the television venue where
advertising and programming are typically separable, these components are frequently more interrelated when
presented via the new information delivery vehicles.
(48) E.g., Olsen Laboratories, Inc., C-3556 (Feb 6, 1995) (consent); Wayne Phillips, D-9237 (Oct. 11, 1991)
(consent); Twin Star Productions, Inc., C-3307 (Oct. 2, 1990) (consent); TV, Inc., C-3296 (July 25, 1990) (consent);
Synchronal Corp., D. 9251 (Oct. 1, 1993) (consent); JS&A Group, Inc., C-3248 (Feb. 24, 1989) (consent). See also
FTC Advisory Opinion No. 191, Advertisements which Appear in News Format, 73 F.T.C. 1307 (1968) (ad simulating
format of news or feature article should “clearly and conspicuously disclose it is an advertisement”); National Dietary
Research, Inc., D. 9263 (Nov. 7, 1995) (consent); FTC v. LaserVision, Inc., No. 94-1691 WJR (C.D. Cal. Mar. 15,
1994) (challenging format of advertising appearing to be newspaper articles as deceptive).
(49) We believe disclosure requirements can be effective when the advertised product is sold through ordering
information provided in the infomercial. However, when the product is not sold in that manner other measures may be
necessary to ensure that the format of the infomercial does not mislead consumers as to the source of the
information presented. We would be happy to work with the FDA in considering what measures might be effective
and practical.
(50) 16 C.F.R. § 255 (1995). The Guides describe FTC enforcement policy.
(51) Id. at § 255.5.
(52) Cliffdale Assocs., supra note 28, at 172.
(53) Numex Corp., C-3463 (October 7, 1993) (consent).
(54) Buckingham Products, Inc., 110 F.T.C. 37 (1987).
(55) Body Wise Int’l, C-3617 (Sept. 25, 1995) (consent).

(56) 21 C.F.R. § 200.200 (1994).
(57) Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976); Bond et al.,
Effects of Restrictions on Advertising and Commercial Practice in the Professions: The Case of Optometry 26 (1980);
see also material cited supra, note 13.