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Not all ads are created equal. For years, the Federal Food and Drug Administration (FDA) has required that prescription-drug advertisements (unlike advertisements for aspirin, cookies, or parachutes) must include extensive warnings about any possible side effects. Since nearly every drug has side effects, and since listing side effects for even the most useful drugs could well take up a magazine page or 10 minutes of air time, there has been almost no such advertising aimed at consumers (as opposed to extensive, detailed ads aimed at doctors).
Now that may be changing.
The changes are coming about because of old loopholes in FDA rules. An ad can circumvent the requirement to list side effects if it doesn't mention a specific drug by name or if it doesn't give any information about what the drug does.
As narrow as those loopholes may be, a handful of pharmaceutical firms now are creatively taking advantage of them. Business Week reported in May that Pfizer Pharmaceuticals, which manufactures the diabetes treatment Diabinese, has been running television ads suggesting the wisdom of being tested for diabetes. There is no mention of Diabinese in the ads, but since the commercials started running in 1983, it's estimated that Diabinese sales have gone up by 15.4 percent. Meanwhile, Boots Pharmaceuticals has offered a $1.50 coupon for an anti-arthritic drug and, in Tampa, has advertised its relatively low price but not what the drug is for. And Ciba-Geigy has applied to the FDA for permission to advertise an antihypertensive drug.
Interestingly enough, the impetus for change has not come from major American pharmaceutical companies. Although Merck & Co. has made a foray into magazine advertising for one of its products and companies are running ads aimed at professionals, William Castagnoli, president of a New York advertising agency specializing in medical advertising, told REASON that many of the larger firms are reticent to advertise drugs directly to consumers. Indeed, at a Washington conference earlier this year, representatives of Upjohn and Lilly stated outright that they much preferred marketing prescription drugs to "informed third parties"-that is, doctors.
Castagnoli explained that advertising directly to consumers would "revolutionize" marketing practices, and many of the large companies don't want the disruption. "Their marketing machinery is set up for health professionals," he said. "They have highly trained people dealing directly with doctors, and they don't want to shell out another $10 million for ad campaigns to the public." He pointed out that the two companies most eager to go beyond FDA proscriptions are Boots, a British-owned company, and Ciba-Geigy, based in Switzerland.
Federal officials are unsure how to respond to the pressure to open up the advertising market. The FDA is currently trying to devise new guidelines, and in 1983 the agency imposed a moratorium on advertising prescription drugs to the public until the new policy is issued. Moreover, a House subcommittee chaired by Rep. John Dingell (D-Mich.) is planning hearings on prescription-drug advertising-but as of May, no legislation regulating the advertising is in the hopper.
The pressure for giving advertising freer play in the market may be irresistible. Washington will no doubt moan and propose, but it may turn out to be a case of the tail wagging the dog.
Driving Out Taxi Regulation
What's a city to do-or, to be specific, what are New Orleans and Minneapolis to do, now that the Federal Trade Commission has started up legal proceedings against the two cities on grounds that their taxi regulations violate the federal antitrust laws? Tim Muris, director of the FTC's Bureau of Competition, thinks the cities ought to deregulate their taxi businesses-and that other cities with anticompetitive taxi regulations should take heed, as well.
The FTC's action is its first antitrust move against city governments since the 1982 Boulder decision, in which the Supreme Court ruled that local governments are subject to the federal antitrust laws. Over the past two years, private parties have increasingly assailed the anticompetitive and trade-restraining practices of local governments in the courts, but up until recently the FTC had kept its nose out of the fracas.
According to the commission, the governments of both New Orleans and Minneapolis conspired with cab companies to restrain trade. The specific acts of restraint include rate regulation, limits on the number of cabs allowed to operate, and prohibiting suburban-area cabs from operating within the city.
(Shortly after the FTC announced its proceedings against Minneapolis and New Orleans, the House approved an appropriations-bill amendment to restrict federal agencies from using funds in antitrust actions against cities. Just days later, the Senate Appropriations Committee approved a similar measure, which is expected to encounter great opposition in a full Senate vote. James Miller, chairman of the FTC, protested the House vote, calling it "an initiative to achieve a special interest exemption.")
If Minneapolis and New Orleans "did not have the challenged regulations," the FTC statement charged, "consumers would have more taxi service at less cost and with less waiting time." Muris estimates that deregulation would save consumers hundreds of millions of dollars and would create as many as 232,000 new jobs.
But there's more than one way to fight city hall on taxi regulation. And in Houston, it's the civil disobedience of Alfredo Santos, a 31-year-old graduate student who has started up an illegal pesero, or jitney service.