Medical device companies increase DTC marketing investment, but still lag behind pharmaceutical industry by years

The pharmaceutical industry has marketed drugs directly to consumers (DTC) for decades, spending billions annually, while medical device companies have previously lagged behind. Now, that is changing: device makers are increasingly turning to TV ads, social media campaigns, and digital marketing, spending hundreds of millions of dollars each year in the U.S. market. This marks a shift toward more consumer-centric strategies, driven by the recognition that advertising boosts sales and the growing influence of online advertising options.

"The rise of the internet and various social media platforms has greatly expanded the channels through which manufacturers can promote their products," said Suzanne Levy Friedman, senior partner at law firm Hogan Lovells.

Jay Zhu, leader of Deloitte's health care technology business strategy, noted that the medical device industry lags pharmaceuticals by 10 to 15 years in DTC advertising, but investment has increased over the past three to four years.

According to data from market tracker Kantar provided to MedTech Dive, companies such as Abbott Laboratories, Boston Scientific, and Medtronic have each spent over $300 million annually on marketing in the U.S. since 2018. The pace appears to be accelerating, even during the pandemic.

Data show that in the first quarter of 2021, the medical devices and equipment category (excluding social media) spent about $130 million on advertising in the U.S., more than double the same period in 2020. If this spending trend continues, the category's annual total will be about $200 million higher than each of the past three years.

Industry spending comparison

Kantar data show that the medical devices and equipment category spent the following on U.S. DTC marketing: $332 million in 2018, $307 million in 2019, $310 million in 2020, and $130 million in the first quarter of 2021. Note: Data exclude social media spending.

Diabetes technology company Dexcom, not included in the above category, has spent more on marketing since 2018 than larger companies such as Abbott, Boston Scientific, and Medtronic, spending nearly $25 million on U.S. marketing last year.

Zhu said the increased use of DTC marketing aligns with a broader trend in the health care industry—companies focusing not only on clinical outcomes but also on the complete patient experience. Additionally, the rise of high-deductible insurance plans has increased patients' out-of-pocket costs, thereby enhancing their decision-making autonomy. Meanwhile, tech giants such as Google, Amazon, and Apple entering the field are also changing how traditional companies reach customers.

"Many people from high-tech or other industries are joining the medical technology industry, bringing new thinking about engaging with patients and consumers," Zhu said. "This has also driven the adoption and increased attention to DTC."

Scott Tuhy, lead medical device analyst at Moody's Investors Service, said DTC marketing helps companies reach patients, raise awareness of new products, and also encourages patients to proactively consult doctors or seek specific products. "When patients proactively request a specific device, it is indeed more likely that they will not only obtain the product but also adhere to its use," Tuhy said.

Zhu believes that engaging patients early and bringing them into the company's "funnel" is key to DTC advertising, applicable to products ranging from continuous glucose monitors to orthopedic and cardiac devices. As for whether this is overall beneficial to patients, there is no definitive answer, but decades of DTC practice in pharmaceuticals have proven one thing: advertising boosts sales.

"Companies would not invest such huge sums without data proving it works and increases profits," said Michael Carome, director of Public Citizen's health research group. "They know this type of advertising works."

"Starting from scratch"

Boston Scientific is a pioneer in DTC advertising in the medical technology field, airing TV ads for its Watchman heart device in select markets in 2017. According to the Boston Globe, executives were divided on whether to take this approach but ultimately leaned toward the idea, hoping to attract future users and promote a new treatment for atrial fibrillation. Boston Scientific declined to speak with MedTech Dive for this article.

Fast forward to February this year, CGM maker Dexcom reportedly spent millions on a 30-second ad slot during the Super Bowl, featuring pop singer Nick Jonas. CEO Kevin Sayer said the company's shift to DTC began several years ago, including restructuring the marketing department and bringing in talent with consumer mindsets from outside the medical device field.

According to Kantar data, Dexcom's U.S. advertising spending has grown steadily over the past three years, from $8.4 million in 2018 to nearly $25 million in 2020, and already approaching $10 million in the first quarter of this year.

Zhu noted that increasing sales and marketing personnel and using data and data analytics to evaluate advertising effectiveness are crucial; otherwise, companies may blindly invest in TV ads or digital marketing with little return. "They must think comprehensively and build supporting capabilities around it to ensure DTC truly creates value," Zhu said.

Another diabetes technology giant, Insulet, is also moving into DTC. Its chief commercial officer, Bret Christensen, said the insulin pump maker has gradually built its DTC system over several years, investing in digital ads, social media campaigns, and making its first foray into TV advertising late last year. The main reason is that the company found many patients in the diabetes community were unaware of the latest innovations, so it needed to raise overall awareness of Insulet's products.

Although there is no philosophical disagreement on whether DTC is appropriate, Insulet still had to build its infrastructure from scratch. "Starting from zero, never having produced a TV ad, we needed to build many capabilities, hire people, and engage third-party agencies to guide the process," Christensen said. "The entire organization was involved in reviewing materials."

According to Kantar data, Insulet's spending jumped from $573,000 in 2018 to $7.5 million in 2020, with nearly $3 million already invested in the first quarter of 2021. The company currently airs TV ads in the U.S. and the U.K. and plans to further increase DTC marketing investment when its upcoming Omnipod 5 pump launches.

The embrace of DTC marketing by diabetes technology companies may signal a broader shift in the medical technology industry, where DTC could eventually become a strategic necessity. Dexcom and competitor Abbott have both invested in DTC marketing for their CGM systems, and the ripple effects have changed the industry landscape.

"We have seen the success of Dexcom and Abbott in DTC," Christensen said. "We believe that although we are part of medical technology, we are entering the consumer space. That is, consumers (patients) have enormous influence over which insulin pump doctors choose, and that influence is growing."

Medtronic's diabetes division is also taking similar steps, planning to operate like a consumer electronics company, with products released or updated on an annual cycle.

Want to make smarter decisions about food¹? #NowYouKnow. The FreeStyle Libre 14-day is a continuous glucose monitoring (CGM) system that helps you make informed decisions without fingersticks*.
— Abbott FreeStyle (@FreeStyleDiabet) June 3, 2021

The FDA has a Facebook too

U.S. device advertising is regulated by the FDA and the Federal Trade Commission (FTC). But the line between product labeling and advertising is not clear-cut, posing regulatory challenges. According to Friedman of Hogan Lovells, the Federal Food, Drug, and Cosmetic Act defines medical device labeling but does not define advertising. Additionally, the FDA has authority to regulate advertising for restricted devices (devices that can only be sold by or on the order of a licensed practitioner or only under specific regulated conditions), while the FTC regulates other devices. But jurisdictional boundaries can also blur.

"If you are promoting the sale of a product, it is generally considered that the FDA has some jurisdiction," Friedman said.

Unlike pharmaceutical manufacturers, medical device companies are not required to submit promotional materials to the FDA in premarket applications, according to Friedman. However, advertising or other promotional materials cannot go beyond the language and claims in the product labeling, which has been reviewed by the FDA as part of the product application. If the FDA finds issues with a company's claims or advertising language, it typically notifies the company privately; if the issue is not resolved, it issues a public warning letter. For more serious false claims, the FDA also issues public warning letters, Friedman said, noting that such actions have increased significantly during the COVID-19 pandemic.

"Everything must be perfect," said Insulet's Christensen, explaining that the company even discussed the placement of the insulin pump on actors in TV ads to ensure the visual message was compliant and accurate. Conveying product information within 30 seconds is also difficult because precise language and disclaimers are required. "When you put it all together, there is little of the desired message left to convey," Christensen said.

Companies must follow the claims or language approved in product labeling on social media platforms and websites. Regulations also vary by country, so all materials—social media posts and accounts, broadcast and digital ads, or websites—must comply with the regulations of specific markets. "The FDA also has computers; they can visit your website more easily than attending academic conferences, trade shows, or going to doctors' offices," Friedman said.

Broadcast backlash

Of course, direct-to-patient approaches carry risks, both for the industry and patients. After Dexcom's Super Bowl ad aired, patients raised cost and accessibility concerns. Dexcom's CEO pushed back on the criticism, saying the investment brought attention to the diabetes technology field and would ultimately help lower costs and improve accessibility. However, some still question whether spending millions on advertising campaigns could have been better utilized.

A diabetes device company can afford over $5 million in advertising while millions of diabetics struggle to afford insulin, which illustrates why advocates point out that these companies spend more on marketing than on accessibility. #insulin4all #dexcom #superbowl
— Justin Mendoza, MPH (@JustinDMendoza) February 2, 2021

Decades of pharmaceutical advertising have produced some studies showing that DTC has adverse effects on patient care because it prompts patients to request the most expensive new products, not necessarily the safest, most effective, or most appropriate. According to a report by the Government Accountability Office (GAO), a federal regulatory agency, pharmaceutical companies spent about $18 billion on advertising for 553 drugs between 2016 and 2018. However, most of the funds were used to market brand-name or new drugs. Carome of Public Citizen believes that focusing on new drugs inevitably drives up health care spending due to higher prices, while increasing the use of drugs with less safety information. "From a public health perspective, overall, the harms far outweigh the benefits," Carome said. "In an ideal world, we would not have this type of direct-to-consumer advertising. But that is not the reality."

Not every medical device company needs to focus on DTC marketing and make the required investments and structural adjustments, such as companies that primarily produce medical imaging equipment or surgical tools for the medical industry. However, DTC spending is sweeping across the industry. Christensen said this trend may be more pronounced among companies with lifestyle products (such as CGMs or insulin pumps), where patients or users have greater say in product choice. "We believe awareness is key because consumers are powerful," Christensen said. "If your product fits this definition, I think DTC is worthwhile."