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February 2007

What everyone needs to know about drug marketing. Part 3: Place, Promotion and Goals

This is the third part of a three part article. The first two parts focused on pharmaceutical products and prices. This part covers the marketing concepts of place, promotion and goals. If you have any comments or suggestions for improvement of this article please contact .(JavaScript must be enabled to view this email address)

Place (distribution)
Distribution channels are the methods used to get products from the factory to the consumer. Drugs are usually distributed via wholesalers and pharmacies so drug manufacturers often have only a small role in distribution. Distribution of drugs is more difficult than for many other products because consumers often need drugs without delay and without interruptions in supply. However drugs have limited shelf lives which may be much shorter if drugs are not stored within a narrow range of temperature and humidity. People in remote areas of developing countries often can not afford enough sales of some or all drugs to fund creation and maintenance of adequate distribution channels from sales margins alone.

Many players have important roles in the “chain of care” required for achieving appropriate use of pharmaceuticals including: patients, careers, doctors, pharmacists, pharmaceutical companies, government regulators, consumer organisations, patients groups and information providers including journalists.

Inappropriate use of pharmaceuticals can occur even when everyone in the “chain of care” performs well except for one weak link. Because any of the players can be a weak link inappropriate drug use can occur even when the manufacturer has played its part well. Inappropriate drug use is more likely when there are multiple weak links. Appropriate use of pharmaceuticals is more likely when all involved in the “chain of care” are well informed, have incentives that reward good performance and use their powers to give first priority to the interests of patients.

In many countries many drugs are classified as prescription only so that consumers can not obtain them without agreement from a doctor. This is justified if and only if the following three conditions are true:

The drugs can cause significant harm. (This is true for many drugs.)
It is difficult for the consumer to judge whether a drug is likely to do more good than harm rather than more harm for them. (This is also true for many drugs.)
The judgement made by the doctor and the consumer together is better than the judgement that the consumer would make alone. (This should always be true. It is not always true but it is often difficult to know whether it true or not.)
When all those conditions are true, overconfident consumers benefit from being forced to obtain medical advice. However in many developing countries many pharmacies sell “prescription only” drugs without requiring a prescription. This removes the barrier but also removes the protection.

In recent years there has been much growth in distribution of drugs via Internet pharmacies, auctions and personal sales. This can be beneficial for consumers by enabling them to obtain appropriate drugs at lower prices. Prices can be lower because of lower overheads for the pharmacy and/or cross border trade from countries with lower prices. As with conventional pharmacies if Internet pharmacies do not maintain high standards then they can be the weak link causing or allowing inappropriate drug use. This can include supply of dangerous prescription only drugs to people (including children) without prescription. The difference is that Internet pharmacies and cross border trade are more difficult to regulate than conventional pharmacies. Even before the development of the Internet it was common for people to obtain prescription only drugs without a prescription from their family and friends. The rise of internet auction sites and other opportunities for individuals to buy drugs from other individuals they don’t know has increased opportunities for people to buy drugs at lower prices but without protections that may be justified.

Promotion

The World Health Organisation defines drug promotion as including: “all informational and persuasive activities by manufacturers and distributors, the effect of which is to induce the prescription, supply, purchase and/or use of medicinal drugs.”[1] There is some overlap between this definition of promotion and the definition of pharmaceutical products used in part one of this article: both definitions include information. The main aim of promotion is not to inform but to persuade. Consumer goods advertisements (eg Coca Cola and Pepsi) rarely convey much information about the features of the product. Instead the emphasis of much advertising is on associating consumption of the product with positive feeling. Much advertising is similar to the peacock’s tail which conveys no information other than that the advertiser is successful enough to afford a lavish display.[2]

The aim of drug promotion is to persuade people to buy more drugs and/or to pay higher prices. This is done by increasing the perceived value of the drug via one or more of several approaches including:

Increasing the perceived frequency and/or severity of the indications.
Widening the indications to include more people.
Increasing the perceived likelihood and magnitude of benefits.
Decreasing the perceived likelihood and magnitude of harms.
Increasing the use of the drug for longer durations.
It is normal for people to believe that only other people are influenced by promotion. Psychologists call this belief the illusion of unique invulnerability.[3] However there is considerable evidence that drug use is influenced by drug promotion.[4] On the other hand, the influence of promotion is limited by the law of diminishing returns ie after initial expenditure on promotion has produced big returns additional expenditure produces progressively smaller returns.

Conduits of drug promotion
In 2002 Nadeem Irfan Bukhari now a Lecturer at the International Medical University, Malaysia published a book about pharmaceutical promotion in Pakistan.[5] He concluded that the main conduits of promotion in Pakistan are: “advertising, detailing, direct mail, sales promotion, publicity and public relations. Among them, detailing dominates most.” This is true for most developed and developing countries except that in many countries drug company sponsored meetings are also very important.

Maneerat Layton of Khon Kaen University has categorised the many conduits of promotion used by pharmaceutical companies in Thailand as follows[6]:

Pharmaceutical Advertisements
Brochures
Sponsored articles
Internet
Sponsored journals subscription or textbooks
Personal Selling
By medical representatives
By opinion leaders in the field and are sponsored as guest speakers (both national and international) at conferences. Most of the time, these guestspeakers will use the company provided slides for their talk.
Sales Promotion
Trade promotion
Product samples
Gifts, gimmicks
Sales force promotion
Sponsorship for academic activities ie. organizing symposiums, exhibition booths, registration fees, tutoring sessions, journal clubs, textbooks, journal subscription
Sponsorship for non-academic activities ie. entertainment, excursions, travelling expenses, dinners, family-related activities
Donation or support for facilities used in the department offices ie. fax machine, printer, furniture, etc.
Publicity/Public Relations
Event marketing ie. FREE bone mass screening test, Health check-up day, Exercise day
Campaigns at drugstores or private clinics
Direct Marketing
Consumers
Internet, hotline call center, postal mail
Patient education ie. brochures, CD-ROM, Disease/Symptom Care center
Special orders for individual patients through physicians’ accounts
Political Alliance
National Essential Drugs Committee
FDA
WHO
This report will classify these conduits into three main clusters:

Advertisements
Gifts, meetings and drug sales representatives
Promotion via other people.
Advertisements stand alone. They represent the company at its best because unlike the other clusters the action is not hidden behind closed doors.

Gifts, meetings and sales representatives cluster together because sales representatives often deliver gifts including offers of travel to and accommodation at meetings.

The third cluster includes promotional activities that are funded by drug companies but implemented by others, sometimes without disclosing the involvement of the company. This cluster includes the use of experts to influence doctors and the use of public relations techniques to influence the public via newspapers, television and other media.

Drug promotion methods
Drug companies aim to identify where people are on the following behaviour change stages and to motivate them to move one or more stages towards repeat use:

Unawareness -> Awareness -> Interest -> Evaluation -> Trial -> Usage -> Repeat usage

Each move requires motivation and decision making so drug companies study how to manipulate human motivations and decision making.[7] In a classic 1968 textbook MC Smith explains that: “Medical men are subject to the same kinds of stress, the same emotional influences as effect laymen. Physicians have, as part of their self image, a determined feeling that they are rational and logical, particularly in their choice of pharmaceuticals. The advertiser must appeal to this rational image, and at the same time make a deeper appeal to the emotional factors which really influence sales.”[8]

Advertisements and public relations techniques are the most cost effective way to move people from unawareness to awareness of the existence of a new drug and for maintaining repeat usage. Advertisements represent the company at its best because unlike the other conduits of promotion advertisements do not occur behind closed doors but are open to inspection by anyone. Advertisements are effective mostly via appealing to desires and fears.[9] Public relations techniques bypass people’s defences against claims made by vested interests to deliver promotional messages whilst giving the impression that the message is coming from a trustworthy source.

One to one visits from sales representatives are the most effective way to move doctors through all the behaviour change stages but are more expensive. Sales representatives are more cost effective when used in synergistic combination with other conduits. Sales representatives are more effective because they can identify the behaviour change stage and the main motivators and decision making styles of the person they are selling to and immediately adapt their approach accordingly. The main influence techniques used by drug sales representatives manipulate doctors’ tendencies to trust experts, trust their peers and trust likable (friendly and/or attractive) people, to be consistent with their commitments and to act on reciprocal obligations when given gifts.[10]

Goals

Like all public companies, drug companies are required by law to maximise return on investment for shareholders. However, like most public companies, the goals of drug companies are more complex. Drug companies employ a variety of people each with a mix of normal motivations including desires for promotions, high incomes, job security and self-esteem via helping to make the world a better place. Drug companies have to provide an environment where staff can pursue at least some of those motivations because the key to the long-term success of companies is attracting and keeping productive staff who are motivated to work hard.[11]

Pharmaceutical companies provide considerable in service training and opportunities for staff to earn promotions. Pharmaceutical company staff often receive higher pay than someone with the same qualifications would get from other employers. This creates the “golden handcuff syndrome”: Drug company staff are under considerable pressure to do whatever works to keep their jobs so they can continue supporting the relatively wealthy lifestyles for to which they and their families have become accustomed.

In recent decades the pharmaceutical industry has not provided job security. There have been many mergers and takeovers followed by large job losses. Even between such major upheavals staff face the risk of instant dismissal if they displease their superiors.[12] Retrenched employees can sometimes get jobs in other drug companies, but not always because drug companies often prefer to recruit and train young people. It is more difficult for staff who have been sacked to get another job in the same industry. The combination of high pay with high risk of instant dismissal leads to the “Emperor’s new clothes syndrome”: Staff tend to not convey bad news to each other or to their superiors.[13]

Many drug company staff “are motivated by a strong belief in the social and human value of their work.”[14] Such beliefs are justified to the extent that the company is honestly promoting beneficial products at fair prices. Such beliefs are unjustified to the extent that the company has social responsibility failures. Staff may genuinely believe that their company’s contribution to society is greater than it really is. Such illusions are common within companies.[13] These illusions arise as a consequence of the “Emperor’s new clothes syndrome” plus the normal tendency for people to believe only what suits their self-esteem.

Former drug company staff have told me that many company staff become aware of some of their company’s social responsibility failures Many of them regard such failure as unacceptable. Some of these staff stay in the company in the hope that they can contribute to reform from within. Others don’t believe that they can achieve improvements but feel trapped by the “golden handcuffs”.

Perhaps some drug company staff believe that social responsibility failures are unavoidable because in “the real world” “dog eat dog” competition for survival is the only way. They believe this despite the fact that in the real world dogs don’t eat dogs. Some may have market fundamentalist ideological beliefs that are not supported by economic evidence.[2] Some may believe that there is no alternative to their narrow understanding of capitalism. This is similar to the faith held by many a thousand years ago that feudalism was the only possible socio-economic system. Others believe that social responsibility failures are acceptable because they believe that their company does more good than harm overall. Some staff accept misleading promotion because they have a sophisticated philosophy, akin to the ancient Greek sophists, that the truth about reality can never be known so only perceptions matter. Consequently persuading people to perceive a drug as better than it really is will be beneficial because that will lead them to perceive more benefit from the drug. Since only perceptions matter it is not important if perceptions match reality or not.[15]

Drug companies are motivated to do whatever works to maximise income. If the incentives for drug companies could be aligned to reward only socially responsible behaviour then drug companies would quickly change to be entirely socially responsible and many of their staff would feel much happier and more motivated and thus be more productive. The challenge is to design a system that would reward drug companies for delivering good products at low prices distributed to everyone in every place that needs them with trustworthy promotion.[16]

 

 

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