How Drugs are Marketed and Promoted
A few years ago I switched doctors. This of course required my filling out a significant amount of paperwork--most of which I'd already filled out at least 7 times in my adult life.
However, I had the privilege of doing my due diligence on a Nexium (esomeprazole) clipboard (it was purple), with a Lunesta (eszopiclone) pen (it was restful), and then watching my time with the doctor carefully on a Protonix (pantoprazole) wall clock (it recommended 40 mg), and I finally made my way out of there with a free sample of Singulair (montelukast) which my doctor and I both agreed would probably work just as well as Benadryl, but without knocking me out. It seemed worth the cost (nothing) to try it out.
These doctor freebies are just the tip of the marketing iceberg.
Last week we discussed the staggeringly high cost of researching and developing a potential drug. But if we thought that was high, it was nothing compared to what pharmaceutical companies spend promoting their drugs once they've been approved. As of 2004, a study by two York University researchers estimated that the industry spends almost double on promotion what it does on research and development.
After over a decade, and easily over a billion dollars spent getting a product to market, it's imperative to recoup those costs.
A Sample Year, A Sample Budget
What does a full-court marketing press look like for a pharmaceutical company, once it has received approval for its new drug?
A 2009 summary put out by the Congressional Budget Office provides a snapshot of pharmaceutical marketing trends in 2008.
- Drug companies spent at least $29.5 billion on "promotional activities."
- "Detailing" (where the pharmaceutical companies send representatives to visit doctors or other healthcare providers to educate them about and encourage them to prescribe their drug) costs $12 billion, over half of the total promotional spending.
- The drug companies spent $3.4 billion sponsoring professional meetings and events, and
- $0.4 billion on ads in professional journals.
- The rest of the promotional budget in 2008, $4.7 billion, was spent on direct-to-consumer advertising. TV ads made up almost 62% of drug company ad spending, print ads 35% and online ads 4%.
To analyze these categories, let’s start at the top, where more than half the money goes-- the healthcare providers?
Consumers Digest reports that pharmaceutical companies spent $28 billion on marketing in 2010, and a full 50% of that was spent promoting their drugs to healthcare professionals, who hold the power of the prescription pad.
Promotions to Healthcare Professionals
Promotion to healthcare providers encompasses four approaches: detailing, gifting, drug samples, and sponsoring continuing medical education (CME).
'Detailing' is providing the doctor information about the new drugs, persuading the doctor to prescribe them.
The companies send pharmaceutical employees (colloquially known as 'drug reps') to visit healthcare professionals in hospitals and offices to educate the practitioners on the recent drugs. The Internet Journal of Academic Physician Assistants explains that "As experts on these drugs, they present their products with confidence, assurance and with the ability to answer questions about side effects, insurance coverage, microbial coverage and more."
Consumers Digest reports that, as of 2009, 77% of doctors let drug reps visit them in their offices, and almost 99% of those had up to 20 drug-rep visits in any given week.
The size of the drug reps sales force is an important decision for the drug companies. The number of reps needed to sell a particular drug to a certain target market must factor in how many physicians to see, how often to see them, how many patients suffer from the illness targeted by the drug, and how many reps to send to offices vs. hospitals.
It has clearly been deemed a worthwhile investment. In fact, Marc-Andre Gagnon and Joel Lexchin in the 2008 issue of PLOS Med estimate that the industry averaged around $61,000 in promotion per physician.
Tchotchkes like pens and clipboards advertising a drug might not seem an impressive persuasive tool, but the pharmaceutical companies have done their research.
Studies have shown that such items can influence physician behavior. Physicians who receive even a small gift may unconsciously recommend the gift-giver's products, without considering alternative options.
Pens, prescription pads and wall clocks aside, drug reps bring doctors free samples of the meds--and this has become big business.
The Wall Street Journal writes that pharmaceutical companies distributed 240 million samples in 2007, to the tune of $3 billion. That year Pfizer won the free samples 'competition,' spending $2.7 billion, with Merck coming in second place with $356 million in spending, and Eli Lilly rounding out the top three with $67 million.
But numbers keep increasing. $6.5 billion worth of free samples were distributed in 2010.
Samples allow doctors to try out new medications they might not have used or even thought of before. The hope behind the strategy is that when doctors run out of the samples, they will continue to prescribe the medication, having been convinced of its usefulness and having accustomed their patients to the new product.
Samples' usefulness in persuading doctors to prescribe the drug has been confirmed. One study in Family Medicine examined prescribing patterns of high blood pressure medications before and after the discontinuation of free samples of new drugs at the Medical Center of Central Georgia in Macon.
While doctors still got free samples, only 38% of the drugs the doctors prescribed were on a list of the safest and most efficacious drugs for the illnesses put together by a national panel. Notably, many of the free samples were not on that list. After the ban, the percent of the safest and most effective drugs prescribed rose to 61%
d) Sponsoring Professional Meetings and Events
The pharmaceutical companies sponsor courses and talks that doctors can attend to satisfy their ongoing requirements for continuing medical education (CME).
Drug company spending on accredited CME and other educational programs has increased since its inception. Spending grew from $302 million in 1998 to over $1.071 billion in 2004 to over $1.5 billion in 2007, actually making up over half of all funding for CME..
By 2008 spending on professional meetings and CME was up to $3.4 billion.
A study published in the Journal of the American Medical Society (JAMA) found that the educational presentations always gave preferential treatment to the sponsor's drug, although the same drugs were discussed as at non-sponsored events. Additionally, doctors self-report changes in prescribing practice in favor of the sponsor's drug.
While many are critical of the industry's role in ongoing education, believing that profit motives lie behind it, the drug companies deny it, asserting that they merely want to help physicians and their patients.
"It's important for industry to support independent education because it's a very effective and credible way of improving patient care," said Mike Saxton, director of professional education and support for Wyeth Pharmaceuticals.
Advertising in Professional Journals
As another way of accessing healthcare providers, a relatively small but still sizeable budget goes to ads in professional journals.
Drug companies carefully select the journals to reach the target audience for the disease. For example, Forrest Labs placed ads for its antidepressant Viibryd (vilazodone HCl) not only in The Journal of Clinical Psychiatry, but, following the treatment of depression's move into the primary care doctor's purview, in the Journal of the American Medical Association, as well. Its presence was, of course, notably lacking in this month's issue of Heart.
Just in two journals I receive this past month alone, the ads had a dominant and persistent presence.
The Journal of the American Medical Association's issues from August 1, 8 and 15th included: a 4-page spread for Byetta (Aug 1) in between the table of contents and the actual articles and the final 2 pages--including back cover-- dedicated to Daliresp (roflumilast) for COPD; a 4-page ad for Perjeta (pertuzumab) for metastatic breast cancer in the first 4 pages of the August 8 issue, followed hard upon by 4 pages of ads for antidepressant Viibryd , and only following these spreads did the table of contents appear, in the middle of which was an ad for Aleve. The journal ended (back cover included) with a push for Pradaxa (dabigatran etexilate mesylate) for stroke reduction.
I had caught on to the pattern by the time I reached the issue for the 15th: the 4 pages following the cover plugged Intermezzo (zolpidem tartrate), for sleep disruption, followed immediately by (yet again)Dalirsep, for those who missed it in previous weeks, and a closing 3-page finale for Victoza (liraglutide injection) for diabetes.
July's edition of the Journal of Clinical Psychiatry featured Intermezzo yet again (5 pages worth) before its table of contents and a closing reappearance by Viibryd.
Turns out Purdue Pharma, partners with Transcept, believes it has a blockbuster with Intermezzo, and so has earmarked $100 million for media spending on Intermezzo.
Direct to Consumer Advertising (DCTA)
In 1985, the U.S. Food and Drug Administration lifted its ban on direct advertising (DTC) to consumers. They could hardly have imagined the floodgates they were opening. Drug companies began pouring millions of dollars into their advertising efforts, first allowed only in print, and then, in 1997, on radio and TV.
- Magazines: $47.2 million
- Newspaper: $1 million
- Outdoor: $100,000
- TV: $291.2 million
- Radio: $3.2 million
- Internet: $5.7 million
Recently drug companies have become even more savvy in digital marketing strategies. In 2008 drug companies spent $93 million for online banner and display ads, plus additional funds for sponsored links on search engines. In 2010 alone online ad spending grew 10.6 percent.
R. Stephen Parker and Charles E. Pettijohn (2007) point out in their article, "Ethical Considerations in the Use of Direct-To-Consumer Advertising and Pharmaceutical Promotions: The Impact on Pharmaceutical Sales and Physicians," that direct to consumer advertising (DCTA) has increased almost exponentially throughout the years. In 2000 pharmaceutical companies spent between $2-2.6 billion on it, a 28% increase from 1999, and a 40% increase from 1991. In 1989, they spent a relatively paltry $40 million.
The results for 2007, which came in after the article's publication, are a staggering $5.375 billion on advertising (Consumer Reports, 2008).
As you might suspect, the money is not spent in vain. Parker and Pettijohn note that, as a result of those billions of dollars in 2000, 10 million patients asked doctors to prescribe medications they had learned about in advertisements.
The AARP polled doctors and found that 49% said they are sometimes pressured by patients to prescribe a particular (brand-name) drug.
When Consumer Reports broke down spending spending on advertising per dollars of sales, the ads seemed a good investment. For example, in 2007, Pfizer spent $180,866,960 on DCTA for its cholesterol medication Lipitor (atorvastatin). They earned $6,165,531,000, which averages to $34.09 of sales per ad.
AstraZeneca, makers of Nexium, for reflux and heartburn, made out even better, spending $96,960,417 on advertising, and earning $4,355,901,000, averaging them $44.92 worth of sales per ad. Not too shabby.
Aside from actual ads, pharmaceutical companies spend an average of $4 billion a year on drug copay coupons. The coupons are meant to help consumers save money on the expensive new brand name drugs by lowering the patient's co-pay, and at one and the same time increasing demand.
It is estimated that drug makers earn between a 4:1 to 6:1 return on investment, from these copay coupon programs.
So while the sheer dollar amounts that drug companies spend promoting their drugs seems staggering, they believe it will pay off for them in the end, and in thus a necessary part of drug development and marketing.
Remember AstraZeneca's famous Nexium push? If you've ever heard the phrase 'the purple pill,' then you're familiar with it. That was a $500 million dollar marketing campaign, that included adding 1,300 sales reps to promote the drug directly to physicians--a serious expenditure for any company. But you've already seen just how well their DCTA alone paid off.
In fact, approved in 2001, Nexium was earning the company $3.9 billion in sales worldwide by 2005.
Sometimes pharmaceutical companies just have to pay to play, or to get "to market, to market"--and earn their keep there. And those payments--together with a good product and some luck--can yield a blockbuster.