Tuesday, April 19, 2005

The Drug Sampling Problem


For pharmaceutical marketers, sampling is the single largest promotional investment, accounting for 55 percent of the $19.1 billion spent on promotion in 2001 (see FIGURE below; taken from "Intelligent Online Sampling Strategies"). It's no wonder -- efficiently expanding sample coverage has been shown to drive significant new prescription growth with impressive ROI.

However, sampling by drug companies as a marketing tactic may be getting out of hand and critics contend that it increases drug prices for all of us. It may not even be very popular with drug companies that use samples to gain physician access but also lose sales because of the giveaway.

Promo

In the chart above, how is the monetary value of samples calculated? If you know, please tell me. My guess, however, is that it uses what's called the "Average Wholesale Price" (AWP). According to the U.S. General Accounting Office (GAO), the AWP may be neither "average" or "wholesale." It's really a "list price" or equivalent to the "sticker price" of a car. (BTW, there are many other analogies between selling cars and selling drugs; giving away free sample, however, is not one of them -- unless you consider the Oprah giveaway). The actual price of drugs is probably much less than the AWP. [For a paper on this subject, see "
Average Wholesale Price for Prescription Drugs: Is There a More Appropriate Pricing Mechanism?"]

Some physicians love samples and claim that it helps them provide care for patients who couldn't otherwise afford the new fangled, expensive drugs (i.e., patients without drug benefits like the elderly or working poor without health insurance).

Some statistics (see article above):
* 29% of samples distributed go to indigent patients
* 13% of samples distributed go to the elderly

"You are talking about billions of dollars worth of free medicine given out by the industry," said one doctor on a conference panel at a recent meeting (see "
A Crisis in Professional Detailing"), "but I have never seen this mentioned anywhere in the lay press. Doctors don't appreciate and patients don't appreciate it. To me this is a typical pharmaceutical PR faux pas."

Another doctor on the panel said "Samples are indispensable. I would never start a patient on a new prescription without a trial run with samples first."

Recently, these comments from physicians were posted to the
PHARMA-MKTING listserv:

"I cannot practice evidence based medicine with amoxicillin and hctz. I need expensive meds many of which some of my patients cannot afford, and samples play a huge role on getting some of these meds to my patients, and so endure the reps and the "talks" to get my patients some of their meds.I also think the Medicare system could not afford to make up the difference in meds if samples were not available. Until there is a better way to help my patients, I will continue to see reps for samples."

Yet other physicians feel they are just helping pharma companies sell more product without being paid for it. "When a physician accepts these samples and then dispenses them, he is the middle man and in effect is working for the drug company for free."

Some have even suggested that drug prices increase as a result of sampling: "I have noticed a sharp increase in the price of Zyprexia after the company left samples in doctors offices."

Terry Nugent, a regular contributor to PHARMA-MKTING discussions, said:

"The real answer to the sample situation is to cut the salesforce. They use samples as bribes to get in to see physicians who otherwise won't allow them on the premises. It's a sick game that costs the companies billions in unfilled Rxs from doctors who give samples sufficient for the entire therapeutic regimen to patients who can perfectly well afford to fill the lost Rx at the local pharmacy (exhibit A is yours truly)."

"It's not the free samples that drives up the price," according to Nugent, "it's in part the cost of the highly paid personal delivery system (the reps). In addition, only the higher margin drugs are sampled, so sampling is actually a function of price, not vice versa."

If the cost of the delivery system is the problem, there are other solutions aside from decimating the sales force, no matter how necessary that may be for other reasons (see, for example, "
Pharma Sales Force Bloat and the Mythical Man-Month").

One solution is to switch to eSampling (see "
Intelligent Online Sampling Strategies" for a complete discussion of this approach).

Eliminating the hand delivery of samples by the drug rep will have a huge negative effect on access to physicians. It will be difficult both for the pharma company and the many physicians that have become dependent upon the samples to keep some of their patients happy.

Education vs Drug Samples
What else could be used to improve access to physicians by sales reps and at the same time help physicians treat their patients? How about product knowledge and patient education materials?


Knowledge is highly valued by physicians. When asked "What do you like about sales reps?", physician respondents in an unpublished study (see "Give Docs What They Want" and "Marketing's Role in Limiting Physician Access and What to Do About It") cited product knowledge first, relationship second, and samples third.

Instead of acting like the drug pusher outside the school gates, drug reps should go into the school and learn more about their products. One knowledgeable rep is probably worth 1.5 ordinary, sales-oriented rep.

I think physician education and the use of the Internet to deliver that education (and samples) will become more and more the mainstay of the pharmaceutical company-physician interaction. You can read more about this in the upcoming April issue of Pharma Marketing News.

2 comments:

  1. I found a good prescription discount card that keeps my med prices low enough that I can pay for them now. It's at www.rxdrugcard.com. Anyone can sign up. They show drug prices right there on the website. It's a life saver. Literally.

    ReplyDelete
  2. Anonymous11:24 PM

    Are Drug Reps Really Necessary?

    One of the main functions of pharmaceutical representatives is to provide free samples to doctor’s offices presently instead of authentic persuasion, and these samples in themselves cost billions to the pharmaceutical industry. Yet arguably, samples are the most influential tool in influencing the prescribing habit of a health care provider. Let me be clear on that point: Its samples, not a representative, who may be the top influencer of prescribing habits.

    Yet considering that drug promotion cost overall is approaching 20 billion a year, combined with about 5 billion spent on drug reps themselves, what if there is another way for doctors to get free drug samples, which is what they desire for their patients to initiate various treatment regimens? What if prescribers could with great elation avoid drug reps entirely?
    There is, actually, a way to do this, but it is limited. With some select, smaller pharma companies, doctors have the ability to order samples by printing order forms on line for certain medications through certain web sites associated with the manufacturers of these samples. Some examples are such medications that can be ordered in this way are keflex, extendryl, and allerx. Possibly several more can or are available to prescribers in this way. Others, however, cannot be acquired by this method.

    So in some situations, a doctor can go on line, print off a sample order form, fax it into a designated fax number after completion of the form, and the samples are shipped directly to the doctor’s office with some products thanks to their manufacturers who provide this avenue. There is no review of the doctors’ prescribing habits by the drug rep. And no embellishments stated by reps actually sounds pretty good for any medical community.

    Usually, this system is available for those smaller companies with very small sales forces to compensate for what may be vacant territories, but can be applied to any pharmaceutical company who, upon discretion, could implement such a system.

    Now, why is this not done more often? Apparently, it is legal to obtain samples in this manner. If samples are the number one influencer of prescribing habits, why spend all the money on reps to deliver samples personally? It’s worth exploring, possibly, since the drug rep profession has evolved into those who become UPS in a nice suit.

    Think of the money that could be saved if more pharma companies offered samples to doctors in this manner. Furthermore, additional benefits with this ideal system are that there is no interruption of the doctor’s practice. And again, there is no risk of bias presented to the doctor by a rep, as they would avoid contact with reps if they order samples through this way- to have the samples directly to be shipped to their office.

    When samples are shipped to doctors’ offices in this manner, prescribing information of the particular med is included with the samples shipped. Doctors can order and utilize samples according to their discretion, and would be free of interference from the marketing elements of pharmaceutical corporations. Patients benefit when this occurs.

    Considering the high costs associated with the pharmaceutical industry, having samples shipped directly to doctor’s offices should be utilized more than it is presently- regardless of the size of the pharmaceutical company.
    Something to think about as one ponders cost savings regarding this issue.

    “The new source of power is not money in the hands of a few but information in the hands of many.”
    ---- John Naisbitt

    Dan Abshear

    Author’s note: What has been written has been based upon information and belief.

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