Drug Ad Ban Would Be Misguided and Face Constitutional Hurdles

Health and Human Services Secretary Robert F. Kennedy, Jr. is reportedly considering whether the Food and Drug Administration and/or HHS may administratively ban or curtail direct-to-consumer, or DTC, pharmaceutical advertisements.

Kennedy also apparently supports the No Handouts for Drug Advertisements Act, a House bill that would forbid pharmaceutical companies from deducting expenses related to DTC advertising from their taxes.

Relatedly, last month Senators Bernie Sanders (I-Vt.) and Angus King (I-Maine) introduced their Senate bill, the End Prescription Drug Ads Now Act, which would ban pharmaceutical companies’ DTC ads.

These proposals and potential administrative actions seem to be based on faulty assumptions. They also face steep constitutional and procedural hurdles.

One such assumption is that DTC pharmaceutical ads caused Americans to spend more money on and consume more drugs than citizens of other countries, despite that the FDA must ensure DTC ads’ truthfulness.

There are several other more likely and impactful causes. Roughly 40% of Americans are clinically obese. By comparison, only about 5% of Japanese are, which means that Americans are much more likely to need medication for obesity-related conditions such as sleep apnea, diabetes, liver disease, joint disease, and cardiovascular disease. Additionally, New Zealanders spend less on drugs per capita than Americans, even though New Zealand also permits DTC pharmaceutical advertising.

Another faulty assumption is that if the government prohibited pharmaceutical DTC ads, or made them too expensive to air, then the pharmaceutical companies would either charge less for their drugs or spend the hypothetical advertising money on research and development.

But drug companies don’t set R&D budgets or drug prices based on advertising spending—DTC or otherwise. Further, the US pharmaceutical industry last year collectively spent $10.8 billion on DTC advertising across all platforms. Their collective total revenue was about $662 billion and they spent more than $100 billion on R&D, meaning DTC ads were only 1.63% of total revenue—insufficient to meaningfully lower prices or boost R&D budgets.

That’s why the Congressional Budget Office found that eliminating DTC advertising would lead to only a 0.1% to 1% drug price reduction at most. In fact, one could reasonably argue that forcing pharmaceutical companies to spend less money on DTC advertising would lead to less money being available for R&D because of lower sales.

And if HHS or Congress wanted to ban advertisements to reduce what Americans spend on medications, perhaps they’d be better off banning advertisements for foods or substances that contribute to obesity or other chronic diseases, such as seed oils, high-fructose corn syrup, fast foods, snacks, breakfast cereal, and beer.

Yet another faulty assumption is that the pharmaceutical companies “own” or “boss” the major television networks due to their DTC ad buys. However, this is unlikely because, as network executives have stated, DTC ads make up only a “low single-digit percentage” of the networks’ overall revenue, which besides advertising includes licensing fees, cable and satellite fees, and digital subscriptions.

Finally, it’s unlikely that banning or disparately treating pharmaceutical DTC advertising would survive constitutional scrutiny. For example, the US Supreme Court in Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council (1976), held that the First Amendment protects commercial speech, and that the government may not ban or “suppress the dissemination of concededly truthful information about entirely lawful activity” because the government is “fearful of that information’s effect.”

The Supreme Court’s subsequent jurisprudence in Central Hudson Gas & Elec. v. Public Svc. Comm’n (1980) and Greater New Orleans Broadcasting Ass’n v. U.S. (1999) established a four-part test to determine when the government may restrict commercial speech. Truthful commercial speech relating to legal activity is presumed to be protected unless the government can show that its restrictions directly advance a “substantial” government interest and are narrowly tailored to do so.

Also, the Supreme Court in Rubin v. Coors Brewing Co. (1995) held that the government must demonstrate that the harms from the restricted commercial speech “are real and that its restriction will in fact alleviate them to a material degree.” Further, the Supreme Court disallowed content and speaker-based restrictions on commercial speech in Sorrell v. IMS Health (2011) and unequal restrictions on distribution of that speech in Cincinnati v. Discovery Network (1993).

Legislative or administrative attempts to ban pharmaceutical DTC advertising—whether by outright ban, tax or ad length impositions, or the regulatory process—likely wouldn’t survive court challenges. Reducing medication and health-care costs are laudable goals, but they should be achieved constitutionally and legally.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

John Shu is a legal scholar and commentator who served in the administrations of Presidents George H.W. Bush and George W. Bush.

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