The health care industry is evolving at lightning speed. At the forefront are changes affecting one of its core segments: the pharmaceutical companies. Each day's news adds another wrinkle to the face of drug marketing...or, more aptly, drug marketers.
At this moment, public policymakers in Congress and the Food and Drug Administration (FDA) are refocusing on an industry that is already one of the most highly regulated in the United States. They are scrutinizing the communications practices of pharmaceutical companies and pledging even tougher legal enforcement.
The industry is responding. Last December, the Pharmaceutical Manufacturers Association (PMA) and the American Medical Association (AMA) adopted a voluntary code on the appropriate relationship between the industry and physicians. Sen. Edward M. Kennedy, D-MA, in a reprise of his 1970's Senate Labor and Human Resources Committee hearings on drug promotion, has asked major drug firms to provide data detailing industry compliance with the PMA and AMA codes and changes in industry practices during 1991.
Companies are taking this renewed focus on regulation seriously. "We've always had extensive medical-legal review procedures," said David Stout, vice president of marketing, Schering Laboratories, Kenilworth, NJ. "But in the past year it's become exhaustive, with a double level of review for each area: medical, legal and regulatory."
Needed: new marketing solutions
Without question, a new age of pharmaceutical marketing has begun. Drug marketers, challenged as never before by the FDA over their marketing communications, are formulating new strategies. They're also second-guessing their own promotions in a high-profile environment where much regulation, but few firm rules, exist. The solutions that many companies arrive at often lead to success not only in marketing their products but also in building overall corporate image.
Admittedly, the stakes are high in the pharmaceutical business. Drug issues lead the list of blue-chip investments. And for good reason. The top 10 prescription drugs generated more than $34 billion in worldwide sales in 1990.
Effective marketing of even a single prescription drug can dramatically affect the long-term fortunes of a pharmaceutical company in more ways than one. Merck, for example, was once a medium-sized New Jersey drug company hardly distinguished from the pack. Launch of its cardiovascular ACE-inhibitor Vasotec [R] (1990 U.S. sales: $1.43 billion) highlighted the chain of marketing successes that have helped make Merck Fortune's most-admired U.S. company--in any industry--for five years straight. Similarly, Glaxo was a little-known British-based company before its ulcer medication Zantac [R], with 1990 U.S. sales of more than $1.3 billion, became the most-prescribed drug in America, surpassing SmithKline's Tagamet [R]. On the other hand, SmithKline became ripe for takeover by British-owned Beecham only after its first-to-market breakthrough Tagament faltered.
"Non-traditional" approaches tried
In 1962, congress gave the FDA jurisdiction over prescription drug advertising. FDA regulations require accuracy and balance in this advertising. The FDA defines advertising as all traditional types of direct-to-physician communications, such as ads in medical journals, direct mail, materials "detailed" to physicians by sales reps, medical symposia or teleconferences.
In the past decade, however, traditional communications were only part of the marketing mix. The stream of break-through or blockbuster drugs slowed to a trickle and a host of other issues intensified pharmaceutical competition. Companies began to experiment with more "non-traditional" techniques to help differentiate themselves and their products. These activities used pulic relations techniques not only to target physicians but also to build consumer awareness of prescription drugs. …