Manufacturers are edging quietly toward ads for prescription drugs

Last year Americans spent nearly $18 billion - the equivalent of more than $ 77 per person - on prescription drugs. And they did so without a single product having been advertised to consumers.

But now developments within the giant United States pharmaceutical industry, together with proposed federal legislation that would increase the number of generic prescription drugs reaching the market, indicate that drug companies may be closer than ever to marketing prescription drugs directly to consumers.

So competitive is the industry, and so potentially lucrative the market, that despite industry concern and a current one-year Food and Drug Administration (FDA) moratorium on direct marketing, most drugmakers are quietly but actively considering advertising, say observers from consumer groups and from within the industry.

As a result, mass merchandising of prescription drugs is becoming a hotly debated topic - one that is raising significant practical and ethical questions. According to some consumer groups, professional associations, and critics within and outside the industry, direct consumer advertising would lead to overprescribing - a practice critics say threatens the nation's health.

''Advertising of prescription drugs directly to the public is a Pandora's Box ,'' says Neil Sweig, a pharmaceutical industry analyst with Prudential-Bache Securities. ''There is magnificent profit opportunity but also a tremendous potential for damage.''

According to analysts, the advent of such direct-to-consumer advertising would cause drugmakers to run risks, not only of lower profit margins, but of increased product liability suits. Last week the New Jersey Supreme Court ruled that drug manufacturers who fail to warn consumers of their products' harmful effects are directly liable for damages.

Proponents of the advertising, who at this point are keeping a very low profile, base their arguments on the idea that consumers need more ''information'' about the proliferating number of drugs available. But consumer critics charge that greater profit is the real motivation.

The controversy and the FDA moratorium were initially sparked one year ago by the first-ever televised promotion of prescription drugs - on a Florida cable-television program aimed at physicians, not consumers. Since then, however , drug manufacturers have consistently but unobtrusively pursued the idea. Although publicly divided on the issue, companies have privately conducted test-marketing studies while openly boosting public-awareness campaigns on television and in print which focus on prevention rather than treatment. At least one drugmaker, Ciba-Geigy Corporation, is now awaiting a lifting of the FDA moratorium to launch a pilot consumer campaign.

Such moves have fostered debate, not only within the drug industry and among consumer groups but increasingly in the advertising and broadcast industries and congressional circles as well. The FDA moratorium effectively prohibits direct-to-consumer marketing (except for price-comparative ads) while the agency is formulating its new rules to govern such advertising. CBS Inc. has just completed the first network-sponsored marketing study of consumer reaction to possible TV and print advertisements of prescription drugs. A House Commerce subcommittee has polled dozens of drugmakers and may hold hearings later this summer.

Until recently, US drug manufacturers supplied publicity about their prescription products only to physicians and other medical professionals. But now, analysts say, a rapidly changing marketplace is forcing some makers to stimulate patient demand more aggressively. Observers point to several factors contributing to an increasingly competitive industry: a declining US world market share (due largely to stringent FDA requirements that indirectly boost US drugmakers' costs), a lull in the number of new drugs coming to market, and the growing generic-drug industry. The latter is a development that some analysts predict will restructure the entire pharmaceutical industry. A bill is in the House, sponsored by Henry A. Waxman (D) of California, which could double the number of cheaper generic drugs on the market and cut the cost of other prescription drugs. Already it is being heralded as the most significant piece of consumer legislation in decades.

While drug companies and industry associations publicly insist that such competition has not stimulated any industrywide moves toward advertising, observers say privately that some foreign-based drug companies, advertising agencies, and media companies - all eager for a piece of the lucrative US pharmaceutical market - are spurring the debate.

Some manufacturers, including the US subsidiary of the British-based Boots Pharmaceuticals Inc., have already experimented with limited consumer promotions. And Ciba-Geigy has publicly endorsed the idea as deserving study. ''We recognize there are lots of risks,'' says David Taylor, Ciba-Geigy's public policy director. ''But a lot depends upon how it's developed and what the regulations are.''

Some other drugmakers, however, remain wary of the abuses that could result from mass merchandising of prescription items. They insist that such advertising would entail significant legal risks if it didn't fully explain the possible hazards. They fear it might also incur a consumer backlash and inflate health-care costs - without providing any guaranteed return on the investment.

''Prescription-drug advertising to consumers is not an idea whose time has come,'' says Laurence Hoff, executive vice-president of the Upjohn Company. ''Certainly it would not benefit the consumer. We think more should be done with public-service announcements and generic-health-care ads that are allowed under current regulations.''

Indeed, many professional groups, including the American Medical Association, have taken official positions opposing direct-to-consumer advertising. According to an AMA spokesman, the association objects to the public marketing of prescription drugs for three reasons: the potential abuse of the doctor-patient relationship; the possibility of medically unnecessary use of drugs; and the probable increased costs of medical care. A recent study by the American Pharmaceutical Association showed that more than 50 percent of pharmacists polled also objected to direct-to-consumer advertising.

Other critics of the change, including the American Association of Retired Persons (AARP), whose 16 million members are the largest users of prescription drugs in the country, agree. They and other consumer groups have consistently lobbied against any mass-marketing campaigns, insisting that advertising is meant to increase sales, not convey unbiased information.

''It's not a move oriented to information, but towards promotion,'' says Ann Averyt of the Consumer Federation of America, a coalition of more than 200 consumer groups opposed to direct-to-consumer drug advertising. Ms. Averyt cites a recent FDA study that showed the majority of people exposed to drug advertising in a test situation recalled a drug's advertised beneficial effects rather than its risks. ''No country in the world allows prescription-drug advertising on TV,'' she adds.

Other critics insist that the ability of federal regulatory agencies to monitor abuses is itself in question. ''The FDA and [Federal Trade Commission] just do not have the resources to monitor all the drug ads now,'' said Fred Wegner, an AARP pharmaceutical specialist, at a recent symposium. ''There is a very real concern that prescription-drug ads can't be regulated at all.''