IAB Analysis of FDA Ruling on Paid Search Advertising April 22, 2009

In late March 2009, the Division of Drug Marketing, Advertising, and Communications (“DDMAC”) of the Food and Drug Administration (“FDA” or the “Agency”) issued warning letters to 14 major pharmaceutical companiesi informing them that they were in violation of marketing practices pertaining to their use of Google search advertisements.ii Search advertisements are brief text advertisements that run beside search engine results. The FDA released these letters to the public in early April 2009. The pharmaceutical companies were given until April 9th to respond to the Agency regarding their intention to comply with the letters.

FDA Warning Letters While the products advertised by the pharmaceutical companies in search advertisements vary, the general warning given by the FDA uniformly stated that the advertisements failed to include important risk information about the advertised drugs. The FDA explained that the advertisements often omitted serious and frequently occurring risks associated with the drugs. The Agency indicated that failure to include such information was false and misleading: “For promotional materials to be truthful and non-misleading, they must contain risk information in each part as necessary to qualify any representations and/or suggestions made in that part about the drug.”iii According to the FDA, the pharmaceutical companies must include within the search advertisements the required “established name” and risk information of the drug, and refrain from overstating the benefits of the product.iv The FDA has noted that the laws regulating advertisements remain the same regardless of the medium used to distribute the advertisement.v

Pharmaceutical Companies’ Concerns Pharmaceutical companies have expressed concern that the FDA’s practice of regulating advertisements in the same manner across various media have led to unintended consequences. For instance, the companies find that including more information in the search advertisements makes them more confusing and misleading contrary to the goal of the Agency to provide transparency to consumers. By enforcing standards created for magazines and television, the companies have observed that such a regulatory enforcement approach does not take into account how Internet advertising has evolved. The companies point to the realities of Internet marketing, such as the limitation imposed on search advertisements limiting them to 95 characters and the amount of information that can fit within that space. The pharmaceutical companies have also expressed frustration that the FDA has yet to provide clear rules on compliance. www.iab.net

Prior Assumption of One-Click Rule Challenged Prior to the issuance of the warning letters by the FDA in late March 2009, media and pharmaceutical companies had assumed that they could comply with marketing requirements by following the so-called one-click rule. Under the one-click rule, a company was assumed to be in compliance with the marketing regulations if the company provided risk information of the drug within one click of the search advertisement. The Agency’s letters have challenged the permissibility of following the one-click rule as a means of compliance with the marketing law: “We note that these sponsored links contain a link to the product’s website …[h]owever, this does not mitigate the misleading omission of risk information from these promotional materials.”vi

Impact of FDA Letters Upon receiving the letters from the FDA, the pharmaceutical companies immediately began to revise the search advertisements. Other advertisements have been removed. Some observers have noted that as a result and perhaps unintended consequence of the FDA’s actions, foreign drug suppliers and those offering homeopathic remedies have increased their market share. Looking to the future of Internet adverting, the industry has expressed an interest in engaging in a conversation with the FDA to discuss the realities of Internet marketing.

Source: Privacy Law and Online Advertising: Legal Analysis of Data Gathering By Online Advertisers Such As DoubleClick and NebuAd; Kathleen Ann Ruane, Legislative Attorney, Congressional Research Service. January 2009.

i The 14 pharmaceutical companies include the following: (1) Idec, (2) Sanofi Aventis, U.S. LLC, (3) GlaxoSmithKline, (4) Forest Laboratories, Inc., (5) Cephalon, Inc., (6) Bayer Healthcare Pharmaceuticals, Inc., (7) Johnson & Johnson Pharmaceutical Services LLC, (8) , Inc., (9) Novartis Pharmaceuticals Corp., (10) , Inc., (11) Boehringer Ingelheim Pharmaceuticals, Inc., (12) Merck & Co., Inc., (13) Hoffman-LaRoche, Inc., and (14) Eli Lilly and Co. ii See 21 U.S.C. 352(a) & (n), 321(n); 21 CFR 201.10(g)(1), 202.1(b)(1), (e)(3)(i), (ii) & (e)(6)(i). iii Letter from Sharon Watson, Food and Drug Administration, to Nadine D. Cohen, Senior Vice President, Regulatory Affairs, Biogen Idec (Mar. 26, 2004) (hereinafter “Letter to Biogen”), available at http://www.fda.gov/cder/warn/2009/Biogen%20Letter.pdf. iv For example, in the letter to Biogen Idec, the FDA stated: “The sponsored links are misleading because they make representations and/or suggestions about the efficacy of TYSABRI, but fail to communicate any risk information associated with the use of this product. In addition, the sponsored links inadequately communicate TYSABRI’s indication and fail to use the required established name.” Letter to Biogen, p.1. v FDA spokeswoman Rita Chappelle has stated, “Our laws for how products that are approved by the agency can be marketed to consumers are the same regardless of the medium, whether they are print ads, radio ads, television ads or Internet ads.” Stephanie Clifford, F.D.A. Rules on Drug Ads Sow Confusion as Applied to Web, N.Y. TIMES, Apr. 17, 2009. vi Letter to Biogen, p.2. See also Letter from Michael Sauers, Food and Drug Administration, to Catherine K. Clar, Director, US Regulatory Affairs, GlaxoSmithKline, p.4 available at http://www.fda.gov/cder/warn/2009/GSK%20Letter.pdf; Letter from Michael Sauers, Food and Drug Administration, to Amy Rubin, Senior Director, Regulatory Affairs, Forest Laboratories, Inc., p. 3, available at http://www.fda.gov/cder/warn/2009/Forest%20Letter.pdf. Additionally, the other letters to the pharmaceutical companies include similar statements.

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