US Pharma, Ad Industries Plan Medicare Ad Blitz

16 August 2005

October 1 2005 is D-day for the new Medicare prescription-drug benefit program - and in this case 'D' stands for dollars.

As of New Year's Day 2006, Medicare, the USA's federal health scheme for the elderly and disabled, will launch the new drug benefit, heralded as the largest expansion in the project's history. Brand-specific advertising, expected to be on a massive scale, will break three months ahead of the program's official launch.

Many of the millions of dollars poured into promoting the benefit will be spent by a coalition that includes health insurers, pharmaceutical companies and drugstore chains - all of which have a massive financial stake in the success of the scheme which was approved by Congress in 2003.

The drug benefit is not mandatory and will cost participants on average around $32 (€26; £18) in monthly premiums, mostly paid direct to one or another of the private companies that will develop, sell and provide the drug insurance.

Participants' benefits are determined by a number of factors: age, the specific medications available under each plan and the amount of their monthly premiums.

One insurer, Aetna, a provider of health, dental, group, life, disability and long-term care benefits, says it will spend $50 million - twice its original estimate - on marketing and other activities related to the new program.

Some companies, eager to start promoting the expected bonanza, have already launched campaigns offering general information to potential beneficiaries - partly to achieve brand recognition and partly to soften up senior citizens for their upcoming product-specific pitches.

One coalition-funded generic campaign is already going the rounds. An avuncular-looking pharmacist smiles reassuringly from the TV screen with a caring message for senior citizens: "You can save hundreds of dollars a year," he promises. "But you have to sign up."

That campaign is as much about getting to understand what motivates the target market - older people tend to trust pharmacists, for example - as it is about selling anything.

Instead, it urges people to enrol. The greater the number of participants, the more insurers' risk is spread resulting in lower premiums.

Says Scott Latimer, Humana's market president for senior products in the retirees' Mecca of central and northern Florida: "They've heard about this benefit, but it wasn't very complete, and it was a while ago. It will take anyone a little bit of time to understand the basic features."

Meantime, the federal government is doing its bit to pour dollars into the outstretched arms of insurers and pharma companies, mailing benefit applications to everyone on Social Security rolls and civil-service retirees aged 65 or over, augmenting the mailing with information from nursing homes, welfare rolls and tax records.

The feds are leaving no stone unturned to preach the Medicare gospel, hiring the National Council of Senior Citizens to stump door to door to evangelize the new benefit. It has even instructed the Forest Service to track down "people camping out in the woods".

Wal-Mart, too, has gotten in on the act, joining with Humana to promote drug insurance in a promo that will see the latter's representatives visiting Wal-Mart stores across thirty-five states.

Data sourced from Wall Street Journal Online; additional content by WARC staff