Controversies whirling around company-sponsored search results that appear on Internet search engines

According to the U.S. FDA, company-sponsored search results that appear on Internet search engines should not contain therapeutic claims if they also contain drug names. FDA suggested this in a cluster of letters to 14 firms citing 48 products. Among products cited in the spate of letters was Biogen Idec's multiple sclerosis drug Tysabri. Biogen said, "Unlike the other products flagged, Tysabri has a disciplined risk management program in place and no patient in the U.S. can gain access to the drug without formal enrollment in the REMS TOUCH program, so the risks are all clearly explained by the physician before prescribing."

Biogen Idec and GlaxoSmithKline are among 14 companies that have received warning letters from the FDA cautioning the companies about their Internet advertising. Jennifer Neiman, a spokeswoman for Biogen, said the FDA letter dated March 26 questioned the use of sponsored links to promote Biogen’s multiple sclerosis treatment Tysabri. Neiman points out that patients can gain access to Tysabri only after formally enrolling in Biogen’s risk management program under a physician’s supervision. “We’ve been highly transparent,” said Neiman.

Brian Orelli commented on Fool.com that the FDA brought out the paddywagon last week, issuing 14 warning letters all circling around the same theme: It is still an ad, even if you have to click on it. Brian said that avoiding "sponsored links" will change the way drugmakers advertise, but he is not convinced it would be a major problem for sales. Brian added, “I imagine that most of the advertisements were effective for increasing brand recognition -- or convincing patients to switch from, say, Pfizer's Rebif to Biogen Idec and Elan's Tysabri -- rather than convincing patients to start treating a medical issue that they wouldn't have treated without the advertisements. It's one less tool in the arsenal, but all the companies are on a level playing field, and cumulative sales shouldn't be hurt that much.”

Brain says, "One has to wonder why the FDA picked now to issue the warnings, since the drugmakers have been advertising like this for quite a while. If the new administration has decided to be generally tougher on pharmaceutical companies, that's certainly bad news for the industry, and a trend worth watching for investors."

Sources: The Pinksheet, BizJournals & Motley Fool