ADVERTISING: Legal, Social, Ethical and Economic Aspects

1. ADVERTISING:Legal, Social, Ethical and Economic Aspects

2. LAWS AND ETHICS Two forms of oversight are: LEGAL What the law allows ETHICAL What we SHOULD do Ethics are usually the higher standard Violations of ethical principles results in laws

3. Avenues for Oversight • GOVERNMENT REGULATION: • [pass and enforce laws] • SELF-REGULATON: • Independent bodies [set standards] • Media companies [to accept ads] • OTHER: • Buyer Recourse [“caveat emptor”]

4. Government Regulation • Federal laws • Alcohol • Food and Drugs • Provincial laws • Alcohol Regulations • Credit and Loan Disclosures • Self Regulation • Canadian Code of Advertising Standards

5. Advertising Standards Canada2001 Complaints 161 Upheld 321 To Council 833 Pursued 1164 Complaints

8. Ethical Perspectives DEONTOLOGY - Gk. deon - obligation • Focus is on the means • Kant’s categorical imperative • “Do unto others” • equity, justice, fairness • Clark: Catholicism and Judaism • Concern about the least able

9. Ethical Perspectives TELEOLOGY -- Gk. telos - end • Focus is on the ends • Utilitarianism • The greatest good for the greatest number • Cost - Benefit analysis • individualism, pursuit of profit, hard work • Clark: The “Protestant Ethic” • “Caveat emptor”

11. Investigators Find Repeated Deception in Ads for Drugs By ROBERT PEAR      WASHINGTON, Dec. 3 — Some companies have repeatedly disseminated misleading advertisements for prescription drugs, even after being cited for violations, and millions of people see the deceptive commercials before the government tries to halt them, Congressional investigators said today. The investigators, from the General Accounting Office, said Pfizer, for example, had continued to make misleading claims in advertisements for its cholesterol-lowering drug Lipitor, despite several letters from the Food and Drug Administration in the last four years. In a new report, the accounting office said that drug company advertising appeared to produce a significant increase in the use of prescription drugs, as well as higher drug spending. The report criticized delays in the enforcement of federal standards for the accuracy of drug advertising and attributed much of the delay to a recent change in procedure by the Bush administration that lengthens the review process

12. Senator Susan Collins, a Maine Republican who was one of five members of Congress who requested the study, said: "The evidence suggests that consumers are paying a lot of attention to these ads, so it's imperative that they be accurate. If the increase in utilization is based on false claims, that's very troubling.“ The report rejected a contention by critics of the pharmaceutical industry, including many Democrats in Congress, who say drug companies spend more on advertising than on research and development. Using data obtained mainly from the drug industry, the report said that drug makers spent much more on research. Last year, it said, companies spent $30.3 billion on research and development and $19.1 billion on all promotional activities, including $2.7 billion for advertising aimed at consumers. But the report said that ad spending rose at a far greater rate than spending on research. Consumer advertising has shot up almost 150 percent since 1997, when the Food and Drug Administration revised its guidelines to permit more ads, and drug makers have shifted much of their spending from print media to television, the report said.

13. The accounting office said that the recent change by the Bush administration had "adversely affected" the government's ability to curb deceptive ads, by significantly increasing the amount of time required to issue a notice of violation. The new procedure has delayed enforcement actions anywhere from 2 weeks to 11 weeks, the accounting office said. Government lawyers have used that time to review the notices. But Senator Collins said, "It takes so long to get letters issued by the F.D.A. that the advertising campaign for a drug may have run its course before the company receives a letter demanding corrective action.“ Typically, when the F.D.A. finds that a drug advertisement is so inaccurate, misleading or incomplete that it violates federal law and regulations, the agency writes a letter instructing the manufacturer to halt the ads. In November 2001, the Department of Health and Human Services told the agency that it could not issue such letters until they had been reviewed for "legal sufficiency and consistency with agency policy.“

14. But, the report said, many advertisements "are on the air for only a short time — about one-fifth of them for one month, and about one-third for two months or less." Under the new policy, it observed, misleading television ads for prescription drugs can complete their "broadcast life cycle" before the agency admonishes the manufacturer. Since 1997, the report said, the F.D.A. "has issued repeated regulatory letters to several pharmaceutical companies, including 14 to GlaxoSmithKline, 6 to Schering Corporation and 5 to Merck & Company." Some companies, it said, "have received multiple regulatory letters over time for new advertisements promoting the same drug." In its most recent letter to Pfizer, on Aug. 12, the agency said that an advertisement in Time, Reader's Digest, Good Housekeeping and other magazines was misleading because it falsely suggested that Lipitor was safer than other statin drugs used to lower cholesterol.

15. Vanessa McGowan, a spokeswoman for Pfizer, said: "We complied with F.D.A.'s request. We pulled the ads and corrected them." Commenting on the report, the Department of Health and Human Services acknowledged that it needed to issue enforcement letters more quickly. But it said the letters had to go through a rigorous legal review because "the F.D.A. cannot afford to be considered a paper tiger." Federal rules say drug ads must present a fair, accurate account of both benefits and risks. From August 1997 to last August, the food and drug agency issued 88 letters accusing drug companies of advertising violations — 44 for broadcast advertisements, 35 for print ads and 9 that cited both types of ads. In many cases, the agency said, companies overstated the effectiveness or minimized the risks of medicines. Last year, for example, the agency told Procter & Gamble to halt certain commercials for its osteoporosis drug Actonel after finding that information about the drug's risks was obscured by "fast-paced, rapidly changing, distracting images" on the screen.

16. Leo Burnett “To me it means that if we believe to any degree whatsoever in the economic system under which we live, in a high standard of living and in high employment, advertising is the most efficient known way of moving goods in practically every product class.”

17. Leo Burnett “Advertising, of course, makes possible our unparalleled variety of magazines, newspapers, business publications, and radio and television stations.”

18. Leo Burnett “It must be said that without advertising we would have a far different nation, and one that would be much the poorer-not merely in material commodities, but in the life of the spirit.” Excerpts from a speech given April 20, 1967 at the American Association of Advertising Agencies’ 50th anniversary

19. Quote of the day If you tell lies about a product you will be found out – either by the government, which will prosecute you, or by the consumer, who will punish you by not buying your product a second time. • David Ogilvy (Ogilvy & Mather)