The role of pharmaceutical marketing

Chapter 21 The role of pharmaceutical marketing




Introduction


This chapter puts pharmaceutical marketing into the context of the complete life-cycle of a medicine. It describes the old role of marketing and contrasts that with its continually evolving function in a rapidly changing environment and its involvement in the drug development process. It examines the move from the product-centric focus of the 20th century to the customer-centric focus of the 21st century.


Pharmaceutical marketing increased strongly in the 10–15 years following the Second World War, during which time thousands of new molecules entered the market ‘overwhelming’ physicians with new scientific facts to learn in order to safely and appropriately prescribe these breakthroughs to their patients. There was a great dependence on the pharmaceutical companies’ marketing departments and their professional sales representatives to give the full information necessary to support the prescribing decision.


Evidence-based marketing is based on data and research, with rigorous examination of all plans and follow-up to verify the success of programmes. Marketing is a general term used to describe all the various activities involved in transferring goods and services from producers to consumers. In addition to the functions commonly associated with it, such as advertising and sales promotion, marketing also encompasses product development, packaging, distribution channels, pricing and many other functions. It is intended to focus all of a company’s activities upon discovering and satisfying customer needs.


Management guru Peter F. Drucker claimed that marketing ‘is so basic it cannot be considered a separate function. … It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view.’ Marketing is the source of many important new ideas in management thought and practice – such as flexible manufacturing systems, flat organizational structures and an increased emphasis on service – all of which are designed to make businesses more responsive to customer needs and preferences.


A modern definition of marketing could be:





History of pharmaceutical marketing


There are not many accessible records of the types of marketing practised in the first known drugstore, which was opened by Arab pharmacists in Baghdad in 754, (http://en.wikipedia.org/wiki/Pharmaceutical_industry-cite_note-1) and the many more that were operating throughout the medieval Islamic world and eventually in medieval Europe. By the 19th century, many of the drug stores in Europe and North America had developed into larger pharmaceutical companies with large commercial functions. These companies produced a wide range of medicines and marketed them to doctors and pharmacists for use with their patients.


In the background, during the 19th century in the USA, there were the purveyors of tonics, salves and cure-alls, the travelling medicine shows. These salesmen specialized in selling sugared water or potions such as Hostetter’s Celebrated Stomach Bitters (with an alcoholic content of 44%, which undoubtedly contributed to its popularity). In the late 1800s, Joseph Myers, the first ‘snake oil’ marketer, from Pugnacity, Nebraska, visited some Indians harvesting their ‘medicine plant’, used as a tonic against venomous stings and bites. He took the plant, Echinacea purpurea, around the country and it turned out to be a powerful antidote to rattlesnake bites. However, most of this unregulated marketing was for ineffective and often dangerous ‘medicines’ (Figure 21.1).



Medical innovation accelerated in the 1950s and early 1960s with more than 4500 new medicines arriving on the market during the decade beginning in 1951. By 1961 around 70% of expenditure on drugs in the USA was on these newly arrived compounds. Pharmaceutical companies marketed the products vigorously and competitively. The tools of marketing used included advertising, mailings and visits to physicians by increasing numbers of professional sales representatives.


Back in 1954, Bill Frohlich, an advertising executive, and David Dubow, a visionary, set out to create a new kind of information company that could enable organizations to make informed, strategic decisions about the marketplace. They called their venture Intercontinental Marketing Services (IMS), and they introduced it at an opportune time, when pharmaceutical executives had few data to consult when in the throes of strategic or tactical planning. By 1957, IMS had published its first European syndicated research study, an audit of pharmaceutical sales within the West German market. Its utility and popularity prompted IMS to expand into new geographies – Great Britain, France, Italy, Spain and Japan among them. Subsequent acquisitions in South Africa, Australia and New Zealand strengthened the IMS position, and by 1969 IMS, with an annual revenue of $5 million, had established the gold standard in pharmaceutical market research in Europe and Asia. IMS remains the largest supplier of data on drug use to the pharmaceutical industry, providers, such as HMOs and health authorities, and payers, such as governments.


The medical associations were unable to keep the doctors adequately informed about the vast array of new drugs. It fell, by default, upon the pharmaceutical industry to fill the knowledge gap. This rush of innovative medicines and promotion activity was named the ‘therapeutic jungle’ by Goodman and Gilman in their famous textbook (Goodman and Gilman, 1960). Studies in the 1950s revealed that physicians consistently rated pharmaceutical sales representatives as the most important source in learning about new drugs. The much valued ‘detail men’ enjoyed lengthy, in-depth discussions with physicians. They were seen as a valuable resource to the prescriber. This continued throughout the following decades.


A large increase in the number of drugs available necessitated appropriate education of physicians. Again, the industry gladly assumed this responsibility. In the USA, objections about the nature and quality of medical information that was being communicated using marketing tools (Podolsky and Greene, 2008) caused controversy in medical journals and Congress. The Kefauver–Harris Drug Control Act of 1962 imposed controls on the pharmaceutical industry that required that drug companies disclose to doctors the side effects of their products, allowed their products to be sold as generic drugs after having held the patent on them for a certain period of time, and obliged them to prove on demand that their products were, in fact, effective and safe. Senator Kefauver also focused attention on the form and content of general pharmaceutical marketing and the postgraduate pharmaceutical education of the nation’s physicians. A call from the American Medical Association (AMA) and the likes of Kefauver led to the establishment of formal Continued Medical Education (CME) programmes, to ensure physicians were kept objectively apprised of new development in medicines. Although the thrust of the change was to provide medical education to physicians from the medical community, the newly respectable CME process also attracted the interest and funding of the pharmaceutical industry. Over time the majority of CME around the world has been provided by the industry (Ferrer, 1975).


The marketing of medicines continued to grow strongly throughout the 1970s and 1980s. Marketing techniques, perceived as ‘excessive’ and ‘extravagant’, came to the attention of the committee chaired by Senator Edward Kennedy in the early 1990s. This resulted in increased regulation of industry’s marketing practices, much of it self-regulation (see Todd and Johnson, 1992); http://www.efpia.org/Content/Default.asp?PageID=296flags).


The size of pharmaceutical sales forces increased dramatically during the 1990s, as major pharmaceutical companies, following the dictum that ‘more is better’, bombarded doctors’ surgeries with its representatives. Seen as a competitive necessity, sales forces were increased to match or top the therapeutic competitor, increasing frequency of visits to physicians and widening coverage to all potential customers. This was also a period of great success in the discovery of many new ‘blockbuster’ products that addressed many unmet clinical needs. In many countries representatives were given targets to call on eight to 10 doctors per day, detailing three to four products in the same visit. In an average call on the doctor of less than 10 minutes, much of the information was delivered by rote with little time for interaction and assessment of the point of view of the customer. By the 2000s there was one representative for every six doctors. The time available for representatives to see an individual doctor plummeted and many practices refused to see representatives at all. With shorter time to spend with doctors, the calls were seen as less valuable to the physician. Information gathered in a 2004 survey by Harris Interactive and IMS Health (Nickum and Kelly, 2005) indicated that fewer than 40% of responding physicians felt the pharmaceutical industry was trustworthy. Often, they were inclined to mistrust promotion in general. They granted reps less time and many closed their doors completely, turning to alternative forms of promotion, such as e-detailing, peer-to-peer interaction, and the Internet.


Something had to give. Fewer ‘blockbusters’ were hitting the market, regulation was tightening its grip and the downturn in the global economy was putting pressure on public expenditure to cut costs. The size of the drug industry’s US sales force had declined by 10% to about 92 000 in 2009, from a peak of 102 000 in 2005 (Fierce Pharma, 2009). This picture was mirrored around the world’s pharmaceutical markets. ZS Associates, a sales strategy consulting firm, predicted another drop in the USA – this time of 20% – to as low as 70 000 by 2015. It is of interest, therefore, that the USA pharmaceutical giant Merck ran a pilot programme in 2008 under which regions cut sales staff by up to one-quarter and continued to deliver results similar to those in other, uncut regions. A critical cornerstone of the marketing of pharmaceuticals, the professional representative, is now under threat, at least in its former guise.



Product life cycle


It is important to see the marketing process in the context of the complete product life cycle, from basic research to genericization at the end of the product patent. A typical product life cycle can be illustrated from discovery to decline as follows (William and McCarthy, 1997) (Figure 21.2).



The product’s life cycle period usually consists of five major steps or phases:









Pharmaceutical product life cycle (Figure 21.3)


As soon as a promising molecule is found, the company applies for patents (see Chapter 19). A patent gives the company intellectual property rights over the invention for around 20 years. This means that the company owns the idea and can legally stop other companies from profiting by copying it. Sales and profits will enable the manufacturer to reinvest in R&D:




The duration and trend of product life cycles vary among different products and therapeutic classes. In an area of unmet clinical need, the entry of a new efficacious product can result in rapid uptake. Others, entering into a relatively mature market, will experience a slower uptake and more gradual growth later in the life cycle, especially if experience and further research results in newer indications for use (Grabowski et al., 2002).



Traditional Pharmaceutical marketing



Clinical studies


Pharmaceutical marketing depends on the results from clinical studies. These pre-marketing clinical trials are conducted in three phases before the product can be submitted to the medicines regulator for approval of its licence to be used to treat appropriate patients. The marketing planner or product manager will follow the development and results from these studies, interact with the R&D function and will develop plans accordingly. The three phases (described in detail in Chapter 17) are as follows.


Phase I trials are the first stage of testing in human subjects.


Phase II trials are performed on larger groups (20–300) and are designed to assess how well the drug works, as well as to continue Phase I safety assessments in a larger group of volunteers and patients.


Phase III studies are randomized controlled multicentre trials on large patient groups (300–3000 or more depending upon the disease/medical condition studied) and are aimed at being the definitive assessment of how effective the drug is, in comparison with current ‘gold standard’ treatment.


Marketing will be closely involved in the identification of the gold standard, through its own research. It is common practice that certain Phase III trials will continue while the regulatory submission is pending at the appropriate regulatory agency. This allows patients to continue to receive possibly life-saving drugs until the drug can be obtained by purchase. Other reasons for performing trials at this stage include attempts by the sponsor at ‘label expansion’ (to show the drug works for additional types of patients/diseases beyond the original use for which the drug would have been approved for marketing), to obtain additional safety data, or to support marketing claims for the drug.


Phase IV studies are done in a wider population after launch, to determine if a drug or treatment is safe over time, or to see if a treatment or medication can be used in other circumstances. Phase IV clinical trials are done after a drug has gone through Phases I, II and III, has been approved by the Regulator and is on the market.


Phase IV is one of the fastest-growing area of clinical research today, at an annual growth rate of 23%. A changing regulatory environment, growing concerns about the safety of new medicines, and various uses for large-scale, real-world data on marketed drugs’ safety and efficacy are primary drivers of the growth seen in the Phase IV research environment. Post-marketing research is an important element of commercialization that enables companies to expand existing markets, enter new markets, develop and deliver messaging that directly compares their products with the competition. Additionally, payer groups and regulators are both demanding more post-marketing data from drug companies.


Advantages of Phase IV research include the development of data in particular patient populations, enhanced relationship with customers and development of advocacy among healthcare providers and patients. These studies help to open new communication channels with healthcare providers and to create awareness among patients. Phase IV data can also be valuable in the preparation of a health economics and HTA file, to demonstrate cost effectiveness.



Identifying the market


At the stage when it appears that the drug is likely to be approved for marketing, the product manager performs market research to identify the characteristics of the market. The therapeutic areas into which the new product will enter are fully assessed, using data from standard sources to which the company subscribes, often IMS (Intercontinental Marketing Services). These data are generally historic and do not indicate what could happen nor do they contain much interpretation. The product manager must begin to construct a story to describe the market, its dynamics, key elements and potential. This is the time to generate extensive hypotheses regarding the market and its potential. Although these hypotheses can be tested, they are not extensively validated. Therefore the level of confidence in the data generated at this stage would not normally enable the marketer to generate a reliable plan for entry to the market, but will start to indicate what needs to be done to generate more qualitative and quantitative data.


When the product label is further developed and tested, further market research, using focus groups (a form of qualitative research in which a group of people are asked about their perceptions, opinions, beliefs and attitudes towards a new concept and the reasons for current behaviour) of physicians to examine their current prescribing practice and rationale for this behaviour. These data are extensively validated with more qualitative research. The identification of the target audiences for the new medicines is critical by this stage.


Traditionally, for the most part, the pharmaceutical industry has viewed each physician customer in terms of his/her current performance (market share for a given product) and potential market value. Each company uses basically the same data inputs and metrics, so tactical implementation across the industry is similar from company to company.



The product



Features, attributes, benefits, limitations (FABL)


A product manager is assigned a product before its launch and is expected to develop a marketing plan for the product that will include the development of information about the existing market and a full understanding of the product’s characteristics. This begins with Features, such as the specific mechanism of action, the molecular form, the tablet shape or colour. Closely aligned to this are the product Attributes, usually concrete things that reside in the product including how it functions. These are characteristics by which a product can be identified and differentiated. For example, these can include the speed of onset of action, absence of common side effects, such as drowsiness, or a once per day therapy rather than multiple doses. Then come the Benefits of the new product. Benefits are intrinsic to the customer and are usually abstract. A product attribute expressed in terms of what the doctor or patient gets from the product rather than its physical characteristics or features. A once per day therapy can lessen the intrusion of medicine taking on patient’s lives. Lack of drowsiness means the patient complies with the need to take the medicine for the duration of the illness and is able to function effectively during their working day. The benefits may also accrue to the physician as patient compliance indicates that the patient is feeling well, thanks to the actions of the doctor. It is critically important for the pharmaceutical marketer to maintain balance in promotional material. The Limitations of the product, where they could lead to the medicine being given to a patient for whose condition the medicine is not specifically indicated, must be clearly indicated in all materials and discussions with the doctor. The potential risk of adverse reactions of a medicine must also be clearly addressed in marketing interactions with medical professionals.


The analysis of the product in this way enables the marketer to produce a benefit ladder, beginning with the product features and attributes and moving to the various benefits from the point of view of the customer. Emotional benefits for the customer in terms of how they will feel by introducing the right patient to the right treatment are at the top of the ladder. It is also important for the product manager to construct a benefit ladder for competitive products in order to differentiate.


Armed with these data and the limited quantitative data, the product manager defines the market, identifies the target audience and their behaviour patterns in prescribing and assesses what must be done to effect a change of behaviour and the prescription of the new medicine once launched. A key classification of a target physician is his or her position in the Adoption Pattern of innovative new products. There are three broad classifications generally used:


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Oct 1, 2016 | Posted by in GENERAL SURGERY | Comments Off on The role of pharmaceutical marketing

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