Friday, November 28, 2008

Pharma Marketing: 1967 vs. 2007

"It doesn't hurt to take a walk down memory lane and look back at how far the industry - and its marketers - have come," says Wendy Blackburn in a recent ePharma Rx Blog post entitled "Pharma Marketing: We've Come a Long Way, Baby."

In that post, Wendy included a vintage Thorazine ad that appeared in a 50's or 60's medical journal. "Tyrant in the house?" asked the ad. "Thorazine can control the agitated, beligerant senile. And help the patient live a composed and useful life."

You can visit Wendy's blog to see an image of the ad. The original ad can be purchased from Deco Dog's vintage ephemera and collectibles Web site.

I went to Deco Dog and found some evidence that pharma marketing may not have come as far as we may think. Modern day ad agencies may have been inspired by old ads and copied some their motifs -- at least in the "sleep aid" drug category.

See, for example, the composite image at the left. On top is imagery from a 1967 ad for Doriden (glutethimide), which the ad proclaimed to be "the most widely prescribed night-time sedative in office practice..."

There are similarities between the sleeping figure in the Doriden ad and the images I have seen in Lunesta ads -- even down to the green color of the blankets. The moth, however, appears to have replaced the bedside book and white roses -- all of which may be symbols of something psychological that is beyond my ability to dechiper.

According to the United States Pharmacopeial Convention:
"Glutethimide was introduced in 1954 as safe barbiturate substitute. Experience showed, however, that its addiction liability and the severity of withdrawal symptoms were similar to those of barbiturates. In 1991, glutethimide was transferred into Schedule II in response to an upsurge in the prevalence of diversion, abuse and overdose deaths, making it an illegal substance in USA as well as a number of other countries. It is classified as a sedative-hypnotic."
I wonder if one or more of the current "sleep aid" drugs will suffer the same fate?

Cymbalta: Pain in the Neck But Not Back for Lilly

Lilly announced today the withdrawal of an application for additional U.S. indication for Cymbalta for chronic pain (see press release here).

Lilly said: "in discussions between Lilly and the FDA, agency reviewers raised questions about efficacy and dosing that revolved primarily around statistical methodology and study design" of the three of three clinical trials submitted in evidence for the new indication.

One of those studies -- for chronic low back pain -- involved ONLY 236 patients, which -- as I pointed out some time ago (see "The Cymbalta Buzz Machine is at Full Throttle!") -- is hardly a basis for making any kind of statistically-significant conclusions.

The results of this trial, whose results were not statistically acceptable according to the FDA, was featured in several news stories in August as I pointed out in the above post. All that effort and PR $ spent to get these stories published in the "biased" press and all for naught. Too bad!

Tuesday, November 25, 2008

"Making A Killing:" Scientology Video Blasts the Pyschiatry-Drug Industry-FDA Complex!

I stumbled across "Making A Killing" -- a new video produced by the Citizens Commission on Human Rights (CCHR), which is a non-profit organization founded in 1969 by the Church of Scientology -- after reading a post by Howard Brody, medical ethicist author of the Hooked: Ethics, Medicine, and Pharma blog.

Brody wrote a "public service announcement" claiming that he was misled into being interviewed for the video that demonstrates the "underhanded and dishonest methods used by Scientology to attack the practice of psychiatry and the use of psychotropic medications."

Brody ended by saying "I regret very much allowing myself to have become involved in this project and would like it to be known that I disown and disapprove of the final product and the way that it has been disseminated."

Of course, after reading Brody's account, I just HAD to view the 95-minute video, which is available in ten segments via YouTube (start here). Currently, this video has only been viewed by a few hundred people, but I suspect many more people will be viewing it after it is talked about in the Pharma Blogosphere, starting with Brody's attempt to distance himself from the project.

The description the video states:
“Psychotropic drugs. It’s the story of big money–drugs that fuel a $330 billion psychiatric industry, without a single cure. The cost in human terms is even greater–these drugs now kill an estimated 42,000 people every year. And the death count keeps rising. Containing more than 175 interviews with lawyers, mental health experts, the families of victims and the survivors themselves, this riveting documentary rips the mask off psychotropic drugging and exposes a brutal but well-entrenched money-making machine.”
Obviously, CCHR makes no bones about being vehemently anti-psychiatry and describes the many ways that psychiatrists and the FDA are in cahoots with the drug industry to get psychotropic drugs approved and prescribed based on very little evidence. One claim the video makes is that many clinical trials of these drugs only involve treatment for 8 to 12 weeks, whereas patients may take these drugs for years.

The video scans a few published articles to prove this point, but I decided to check for myself. I chose to look at drug trials for Cymbalta, which was approved by the FDA for the treatment of "Generalized Anxiety Disorder" (GAD) -- one of those "diseases" that the video claims is not a disease at all. I picked a study at random from the Lilly Clinical Trial Registry site and found trial 5075 (HMBR), a phase III study. Sure enough, when you look at the report, the duration of treatment was 9 weeks, during which time there were no deaths reported.

On the basis of these kinds of trials, the drug industry is completely truthful when they say that clinical studies show no evidence that these drugs cause an increase in suicides, which is what CCHR and many relatives of people who have committed suicide when on these drugs claim. So, we will never know if "psychotropic drugs now kill an estimated 42,000 people every year" as the video says. But that number is just thrown in by CCHR for dramatic effect and you may call it "underhanded and dishonest," but if you can get beyond the rhetoric, you'll have to admit that the video makes some very valid points worth considering.

For example, the video points out that many mental disorders that are catalogued in the DSM as "diseases" are not really diseases at all. They are just disorders or some common, everyday behaviors we all endure that have been "voted" as diseases by psychiatrists who profit from drug industry money and from writing prescriptions. Many of the experts interviewed admit that there are no physical, objective tests for mental illnesses. The Cymbalta study I cited above, for example, uses a HAMA score -- a subjective rating test where patients answer questions about how they feel -- to determine effectiveness of the treatment.

I'm not going to jump up and down on my couch to defend the Church of Scientology's position that all mental diseases are fictitious and do not require drug treatment. But there does seem to be scant scientific evidence to support the use of admittedly dangerous drugs for such iffy conditions as GAD (see "eGAD! How I Learned to Stop Worrying and Love Cymbalta!").

However, we don't have to look much further than the news reports of the last few days to know that psychiatrists are too cozy with the drug industry. Just yesterday, Ed Silverman of Pharmalot reported that Harvard University’s Joseph Biederman -- a world-renowned child psychiatrist also mentioned in the CCHR video -- "had earned far more money from drugmakers than he had reported to the school" and that "e-mails and internal Johnson & Johnson documents made public in a court filing reveal Biederman pushed the drugmaker to fund a research center at Massachusetts General Hospital, and the point was 'to move forward the commercial goals of J&J,' according to the documents, The New York Times reports. The documents also show J&J wrote a draft summary of a study that Biederman was said to author" (see "Harvard’s Biederman And His Ties To J&J")

Silverman also reported this story a few days ago:
"Last May, National Public Radio talk-show host Fred Goodwin was, himself, the subject of a great deal of chatter. An episode of his program, “The Infinite Mind,” which is heard on 300 NPR stations, featured three experts who discussed the controversial link between antidepressants and suicide. And all four, including Goodwin, declared that worries about the drugs have been overblown.

"But there was a catch: Goodwin never pointed out that all three guests had ties to pharma, or that the show received 'unrestricted' from drugmakers, including Lilly, which sells Prozac and Cymbalta. The segment, by the way, aired just two months after UK regulators concluded a four-year investigation of Glaxo's Paxil and found the drugmaker had been aware since 1998 that its pill was associated with a higher risk of suicidal behavior in adolescents." (See "Talk Is Not Cheap: NPR Host Has Ties To Pharma").
Last week, the Carlat Psychiatry Blog reported "an FDA advisory committee has accused the agency of doing too little to warn physicians about the dangers of prescribing newer antipsychotics to children" (see here).

Speaking of FDA Advisory Committees, CCHR points out what we've all been saying for years: these committees are loaded with conflicts of interests -- physicians who have ties to the drug industry who recommend drugs for approval.

Neither you nor I may want to further the goals of the Church of Scientology, but it has produced an effective video that is an indictment of the drug industry's too close ties with psychiatrists. I urge you to view this video and get beyond the hype to objectively evaluate some of the issues it raises. It made me rethink a few things.

Monday, November 24, 2008

What's the Future of DTC Advertising?

Both the economy and new political atmosphere in Washington are likely to affect direct-to-consumer (DTC) advertising of Rx drugs in the near future.

"According to a new study by TNS Media Intelligence," reports Advertising Age, "DTC spending is down for the second consecutive year and likely will not reach the $5 billion mark by the end of 2008 that many media companies had counted on."

Under the new Obama administration there will be new leaders of HHS (Daschle) and the FDA (TBD). New pressure will be put on the pharmaceutical industry to limit or perhaps ban DTC advertising.

The drug industry itself may be moving towards a voluntary moratorium on DTC advertising of newly-approved drugs.

Please take a few minutes to tell me your opinion of the future of Direct-to-Consumer (DTC) advertising of prescription medications under a new Democratic Administration. In this survey, please focus on the near future: ie, 2009 and 2010. Questions include:

  1. Will DTC spending increase or decrease in 2009 compared to 2008? By how much?
  2. Should all or some forms of DTC advertising be banned in the US?
  3. Should there be a moratorium on DTC advertising? Should it be mandatory or voluntary?
  4. Should the business-tax deduction for DTC spending be taken away by legislation?
  5. Is there adequate risk information presented in DTC ads? Is it effectively communicated and does it balance benefit information?

Take the survey here

Results of this survey may be summarized in a future issue of Pharma Marketing News.

Your comments are confidential (anonymous) unless you specifically provide your contact information at the end of the survey and allow us to attribute comments to you personally.

Resources & Further Reading:

Friday, November 21, 2008

An Interesting Chart - Is There One Like This for Drug Prices?

The following is a chart of gasoline prices since the 1950s and 60s.

"Oil prices go up, gas prices at the pump go up, everybody goes into a flurry of activity," said President-elect Obama. "And then the prices go back down and suddenly we act like it's not important," he said during a television interview. "As a consequence, we never make any progress."

I don't know if there is a similar kind of chart for drug prices. In terms of "inflation adjusted" dollars, are we paying more for drugs today than we did, say, in 1993 when Hillary Clinton first tried to implement universal coverage? Just speculating. Nice chart anyway.

Scare Balance or Scare Tactics? A Weak Case Against More DTC Risk Information

Based on some minimalist data reported in the Wall Street Journal, Bob Ehrlich of DTC Perspectives Blog concludes that "we need to be judicious how we approach patients with side effect information" in direct-to-consumer (DTC) advertising of Rx drugs (see "Fair Balance or Scare Balance"). The WSJ article cited some not-very-scientific research, which "shows" that "expecting to feel ill can bring illness on in some instances" (see "Power of Suggestion: When Drug Labels Make You Sick").

Clearly this WSJ article is another example of Ehrlich's expressed perception that the media "[hypes] negative outcomes with their 'death in your medicine cabinet' type stories." NOT!

In this case, the media is a great source of questionable research that Ehrlich can use to make a case against current FDA thinking that risk information is not adequately communicated to consumers in DTC ads. Here's what Ehrlich says:
"She [ie, Melinda Beck, the WSJ reporter] cites several studies which show how powerful the power of suggestion is in making us think we have side effects. In a study last year men taking a drug for prostate enlargement who were informed it could affect sexual function were three times more likely to actually have erectile dysfunction than those not told. In another study, subjects were given sugar water and told it could make them vomit. Of those told of the potential side effect, 80% actually did vomit.

"The point of Ms. Beck's column is that we need to be judicious how we approach patients with side effect information. I believe we need to do a better job giving patients the real odds of something happening to them."
The WSJ does not tell us much about the details of the studies cited except that one study was a "double-blind" -- impressive so far -- study involving 60 people -- NOT so impressive! The sugar water study was done in some unidentified hospital in the 60s (institutions did lots of weird studies on unsuspecting patients in the 60s!). Again, not impressive and hearsay as far as I am concerned.

The erectile dysfunction study involved 120 patients and was done at the University of Turin (see here) -- probably next door to the scientists trying to prove that the Shroud of Turin is authentic!

In the Turin study, 60 men were not counselled on the drug's sexual side effect and 60 men were told " may cause erectile dysfunction, decreased libido, problems of ejaculation but these are uncommon." Only 107 men completed the study: 52 men in the first group reported problems compared to 55 in the second group.

This is the sort of small difference in a tiny sample that many experts would dismiss as not scientifically valid. In fact, that's exactly what GSK claimed when results from their own study suggested that Avandia may increase cardio-vascular incidents (see "Avandia: Enough Blame to Go Around").

What Ehrlich doesn't mention at all in his "Fair Balance" piece is the other side of the balance sheet: benefit statements made in DTC ads.

I am sure there are studies that show patients' symptoms IMPROVE when they are lead to believe that there will be improvement. In fact, many people given sugar pills in clinical trials DO improve precisely because of this "placebo effect." The WSJ article, like Ehrlich, focused only on the "nocebo effect."

But DTC ads include a lot of benefit statements that may induce more benefits just as effectively (or ineffectively) as risk statements induce more side effects, or claims of side effects. In fact, I would contend that the benefit statements -- especially when made by trusted celebrities like Sally Field -- are much more effective in inducing positive results than the side effect statements are at inducing negative effects.

The FDA may agree with me and they want to determine if there is actually a fair balance between risk statements and benefit statements.
"I propose FDA study the effect of risk communication in the context of the scare effects," said Ehrlich. "They focus on adequate communication of risk and side effects but not on whether it is interpreted wrongly. It would be interesting to see consumers place the odds of occurrence after seeing ads. I bet they vastly overstate the odds of serious side effects happening to them."
And I bet that they also vastly overstate the odds of benefits happening to them!

Ehrlich closes with:
"I am afraid that telling consumers everything that could happen to them is not protecting them or informing them. It is a shotgun approach that makes regulators feel better but does not promote real consumer protection."
In the Pharma Marketing News article "DTC Risk Communication: Is More or Less Needed?" I quote several experts on risk communication in DTC advertising, including my friend Harry Sweeney, Chair of the Executive Committee for the Coalition for Healthcare Communication. Harry was recently inducted into the Medical Advertising Hall of Fame.
"We ought to clarify that risk is a lot more than odds and probability," said Sweeney. "You have to have a hazard. You have to be exposed to the hazard. Then there's proportion -- the magnitude of the risk, which is not discussed in the pharmaceutical world. We are given tiny numbers upon which to make important major communications policy decisions."
Sweeney pointed out the need for a baseline of what consumers understand about drug risk before we can move the needle where it ought to be. He engaged the audience in a "parlor game" as a demonstration (see chart below).

Thursday, November 20, 2008

DJIA Crash Dummy!

The auto industry is using the DJIA as a crash dummy!

The stock market is down again today.

Sunday, November 16, 2008

Peter Rost Gets Serious About Becoming Obama's Choice for the New FDA Commissioner

Today I noticed that Peter Rost -- former Pfizer Marketing VP, turned drug industry whistle blower, author, and blogger -- changed the name of his blog (again!) to PETER ROST FOR FDA COMMISSIONER.

It all started when I reported on Pharma Marketing Blog that FDA Intern -- Strange visitor from an Ivy League school who came to FDA with powers and ability far beyond those of Janet Woodcock or even FDA commish Andy von Eschenbach! -- announced her endorsement of Peter Rost as president-elect Obama's nominee choice for the new FDA Commissioner (see "FDA Intern Supports Peter Rost for New FDA Commish!").

Peter himself had re-published on his blog a 2004 press release in which Rahm Emanuel -- Obama's new Chief of Staff -- expressed a glowing opinion of Rost (see "Emanuel Statement: Importation Press Conference with Pfizer Vice President Dr. Peter Rost").

Shortly afterward, I decided to start my "Who Should Obama Nominate for FDA Commissioner?" survey (see "Vote for New FDA Commissioner: Let Obama Know"). I picked names of 10 contenders from opinions expressed by various bloggers in the Pharma Blogosphere to include in the survey. Out of respect for FDA Intern, I included Peter Rost in that list. Respondents can also write-in their own choices.

I asked several bloggers to include notices about my survey on their blogs and a few, including Rost, did so.

What surprised me -- and I think Rost as well -- was that Rost became the leading contender very early on and still leads the pack with nearly 100 people voting to date (see "FDA Critics Lead the Pack of Contenders for New FDA Commissioner According to Poll!"). This despite the fact that I endorsed Susan Wood on Pharma Marketing Blog (see "Susan Wood: 'The One to Take the Lead' of the FDA").

At first, Rost did not take himself seriously as a contender for FDA Commissioner. But he also saw the results of my survey and posted them to his site and the story was picked up by a German newspaper that obviously took all this seriously (see "Germany discusses possibility for Dr. Rost to become new FDA Commissioner").

I also pointed out to Rost that the Obama transition team had a Web site where people could submit their resumes for government jobs in the Obama administration. Rost thanked me for the heads-up and quickly applied.

I also notified the Obama transition team about my survey and suggested they keep up with the results and comments from respondents when I publish them in an upcoming issue of Pharma Marketing News.

Here are the top contenders to date for FDA Commissioner nominee, according to my survey respondents:
  1. Peter Rost - 24.5%
  2. Steven Nissen -- 14.9%
  3. Janet Woodcock -- 12.8%
  4. Susan Wood -- 10.6%
If we look at just respondents from the USA, the results are a bit different:
  1. Steven Nissen -- 17.3%
  2. Peter Rost -- 16.0 %
  3. Janet Woodcock -- 12.0%
  4. Susan Wood -- 12.0%
Of course, now that the ROST FOR FDA COMMISSIONER campaign is in full swing, we can expect even more votes for Rost!

What do you think? Is Rost your choice for FDA Commissioner? Vote now!

Friday, November 14, 2008

FDA Critics Lead the Pack of Contenders for New FDA Commissioner According to Poll!

In a surprising turn, three outspoken critics of the FDA are in the lead in my "Who Should Obama Nominate for FDA Commissioner?" survey! In order, the 5 leaders as of today are:
  1. Peter Rost
  2. Steve Nissen
  3. Susan Wood
  4. Janet Woodcock and Robert Califf (tied for fourth place)
Peter Rost, Steve Nissen, and Susan Wood have all been very critical of the pharmaceutical industry in general and the FDA in particular. Rost is a drug industry whistle blower; Nissen is a cardiologist who has often tangled with FDA's handling of drug safety information; Susan Wood worked inside the FDA until she resigned in protest (see more details about these and other contenders within the survey site).

It seems that the same sentiment that propelled Barack Obama into the presidency -- ie, "change we can believe in" -- is also guiding respondents to my FDA Commissioner survey.

I should point out that a large majority (56%) of respondents to the survey say they are somewhat or very supportive of the pharmaceutical industry (24% and 34%, respectively), whereas only 22% say they are somewhat or very unsupportive of the industry.

DTC Ad Spending Will Decrease 9% in 2008 and 11% in 2009!

"According to a new study by TNS Media Intelligence," reports Advertising Age, "DTC spending is down for the second consecutive year and likely will not reach the $5 billion mark by the end of 2008 that many media companies had counted on." (See "DTC Spending Falls for Second Consecutive Year").

I've plotted the numbers in the chart in the left (click on the chart to enlarge). The 2008 bar represents TNS's projection based on data from the first 8 months of 2008. It's a 9.6% drop from 2007, which was 3.7% less than 2006.

Nothing to "get alarmed about," says Bob Erhlich of DTC Perspectives (see his blog). He was basing his remark on his own estimate that the decrease will only be 6-8%. If I were a DTC ad agency, I'd be alarmed even with an 8% decrease in business!

What's alarming, however, is that this measured media spend may be a bellwether for pharma spending across the board, including online spending -- which I heard is also down, down, down -- and professional (ie, physician) ad/marketing spending.

And it's likely to get worse before it gets better, which is reflected in the last, very dark, bar of the chart. This is my prediction for DTC spending in 2009.

Why do I think DTC spending will decrease by 11% year-over-year in 2009? Simple:
  • We're in a world-wide recession that economists predict will last longer than any recession in recent history and as Bob Ehrlich admits, "I doubt 2009 will be a year of risk taking."
  • I don't see any new DTC-worthy blockbuster drugs on the horizon that will boost DTC ad spending in 2009.
  • Even if there were new drugs approved soon, it is likely that the industry -- under pressure from Congress -- will impose a 1-year moratorium on DTC advertising for any new drugs brought to market in 2009 (see my post: "An Experiment: Ban All DTC Broadcast Advertising for One Year").
  • There will be increasing pressure on pharmaceutical marketers to prove to managed care organizations, insurers, and Medicare (which may be given the power to negotiate drug prices) that brand name drugs are effective.
Direct-to-Payer Convincing Will Replace Direct-to-Consumer Advertising
The last point is important. I believe the era in which drug companies can speak directly to consumers to influence them to ask for expensive drugs is over. The new focus will be on payers to convince them that they should pay for new drugs based upon evidence. I will write more about this in the upcoming November, 2009 issue of Pharma Marketing News (see preview here; subscribe now to get it free).

Perhaps DTC advertising will be replaced by DTP -- Direct to Payer -- convincing!

So, I predict DTC spending will decrease by 11% in 2009 compared to 2008. Why 11% and not 5% or 2%? Just my gut and compared with other numbers I am hearing about in other industries.

P.S. Keep in mind that the numbers from TNS are "measured media," which does not include search engine marketing, but does include web-based display ads. I suspect that online ad spending, in general, is under-represented in the TNS numbers. While other industries -- eg, package goods -- are spending more online and less on broadcast advertising (see "Kellogg Bolsters Digital ROI as Online Push Continues"), I've seen indications that pharma is cutting back on online spending.

You're welcome to give your opinion on the future of DTC advertising in the following survey:

What's the Future of DTC Advertising?
Survey: What's the Future of DTC Advertising?

Thursday, November 13, 2008

Susan Wood: "The One to Take the Lead" of the FDA

Barack Obama won me over with his slogan "Change You Can Believe In." One change that he needs to make as the new president is the FDA Commissioner. A change I would believe in is Susan Wood in that position.

Who is Susan Wood?

In her own words she is "The One To Take the Lead." This was the title of her January, 2008, blog endorsement of Senator Hilary Clinton for the Democratic party's presidential nominee (see below). I don't hold that against her, though.

I urge president-elect Obama to do what I am sure Hilary Clinton would have done if she were president: nominate Susan Wood as the new FDA Commissioner!

Obviously, Woods' nomination would send a message to Clinton and her supporters -- not to mention the foes of abortion -- about where Obama stands on women's rights. But, it's not just about women's rights and abortion, it's about science vs. politics in control of the FDA and having someone in charge who will "stand up and demand that FDA do its job properly."

BTW, Susan Wood is the #2 choice of respondents to my Who Should Obama Nominate for FDA Commissioner? survey. Who's the #1 choice? Peter Rost, former Pfizer marketing executive, now drug industry whistleblower, author, and blogger!

It's still early and your vote counts! Please vote for who you think Obama should pick as the new FDA Commissioner. Vote here.

Meanwhile, here's Ms. Wood's post:
Although stories about reproductive health and politicization of science have made headlines recently, stories of how these problems are solved are less often told. On August 31, 2005 I resigned my position as Assistant Commissioner for Women's Health at the Food and Drug Administration (FDA) because the agency was not allowed to make its decisions based on the science or in the best interests of the public's health. While my resignation was widely covered by the media, it would have been a hollow gesture were there not leaders in Congress who stepped in and demanded more accountability from the FDA. Today, women are able to access emergency contraception, a safe, second chance option for preventing unintended pregnancy in a timely manner without a prescription. Senator Clinton is the leader that made this happen, and I can tell the story from having watched it unfold.

I have been working to improve health care for women and families in America for nearly 20 years. In 2000, I became the Director of Women's Health for the FDA. I was rather quietly doing my job when the debate began in 2003 over whether or not emergency contraception should be providedover-the-counter (OTC). As a scientist, I knew the facts showed that this medication, which can be used after a rape or other emergency situations, prevents an unwanted pregnancy. It does not cause an abortion, but can help prevent the need for one. But it only works if used within 72 hours and sooner is even better. Since it is completely safe, and many women find it impossible to get a doctor's appointment within two to three days, making emergency contraception available to women without a prescription was simply the right thing to do. As an FDA employee, I knew it should have been a routine approval within the agency.

Plan B emergency contraception is just like birth control pills - it is not the "abortion pill," RU-486, and most people in the United States don't think access to safe and effective contraception is controversial. Sadly, in Congress and in the White House, there are many people who do oppose birth control. And although this may surprise you, this false "controversy" not only has affected emergency contraception, but also caused the recent dramatic increase in the cost of birth control pills on college campuses, and limited family planning services across the country. The reality is that having more options for contraception helps each of us make our own decisions in planning our families and preventing unwanted pregnancies. This is something we can all agree on.

Meanwhile, inside the walls of the FDA in 2003-2004, the Bush administration continued to throw road blocks at efforts to approve emergency contraception over the counter. When this struggle became public, I was struck by the leadership that Hillary Clinton displayed. She used the tools of a US Senator and fought ardently to preserve the FDA's independent scientific decision making authority. Many other senators and congressmen agreed, but she was the one who took the lead, saying she simply wanted the FDA to be able to make decisions based on its public health mission and on the medical evidence.

When it became clear that FDA scientists would continue to be overruled for non-scientific reasons, I resigned in protest in late 2005. I was interviewed by news media for months and traveled around the country hoping that many would stand up and demand that FDA do its job properly. But, although it can help, all the media in the world can't make Congress or a President do the right thing.

Senator Clinton made the difference. The FDA suddenly announced it would approve emergency contraception for use without a prescription for women 18 and older - one day before FDA officials were to face a determined Senator Clinton and her colleague Senator Murray at a Senate hearing in 2006. No one was more surprised than I was. I hope all of those who benefited fromthis decision know that it wouldn't have happened if it had not been for Hillary Clinton.

Sometimes these success stories get lost in the "horse-race stories" about political campaigns and the exposes of taxpayer-funded bridges to nowhere, and who said what to whom. This story of emergency contraception at the FDA is just one story of many. Senator Clinton saw a problem that affected people's lives. She then stood up to the challenge, never wavered and worked to solve it. The challenges we face in health care, our economy, global climate change, and issues of war and peace, need a leader who has those skills and commitment. This is my view.

Lilly's "40 over 40" Erectile Dysfunction Campaign is a "Discredit on the Industry" Says UK Watchdog

According to an article in the London Financial Times:
"Eli Lilly is to be reprimanded by the UK pharmaceutical industry watchdog for 'unbalanced' promotion of its anti-erectile dysfunction drug Cialis, in violation of ethical rules.

"The Prescription Medicines Code of Practice Authority has ruled that the US-based company 'brought discredit' on the industry through a marketing campaign on television, the internet and in brochures in GP surgeries in the UK."
The Lilly campaign that is the focus of this reprimand is the so-call “40 over 40” campaign, which claims that "40 per cent of men aged over 40 had problems with erectile dysfunction."

It's interesting that the UK "watchdog" focused on the failure of the campaign "to cite the side-effects or risks, and in a way that would have encouraged patients to seek a prescription for Cialis."

Back in July, I pointed out EXACTLY how this campaign "encouraged patients to seek a prescription for Cialis:"
"A section of the site is about 'ED treatment options,' which includes a table listing oral treatments, penile injections (ouch!), and vacuum pumps (hmmmm...). But due to EU laws banning DTC advertising, the site cannot mention oral treatments by name and must refer to them as 'product 1,' 'product 2,' and 'product 3.'

"Visitors are urged to talk to their doctors about treatment options -- doc, I would like 'product 1' please. Huh? I suppose Lilly sales reps can prep doctors so that they know that "product 1" = Cialis when UK guys come in and ask for it."

See "40over40: Lilly's DTC ED Awareness Campaign in the UK".
Unfortunately, I did not do a screen capture of the Treatment Options page of the Web site. If you follow that link ( today, you will see this:

It will be interesting to see if the "product 1" ploy is still used when the page is revived and includes side-effect risks. Will it still bring "discredit on the industry"?

Wednesday, November 12, 2008

FYI: Centocor Launches New Web Site to Help Physicians Converse with Patients About Remicade

Click on image to enlarge (or visit the web site).

Here's the press release:

Centocor, Inc. announced today the launch of MEDVERSATION(TM) (, an extensive web-based resource designed to facilitate more-informed conversations between U.S. physicians and their patients about the efficacy and safety of REMICADE(R) (infliximab).

This interactive web application, in development for the past three
years and the first in its therapeutic class, provides physicians general
information about the progression of certain inflammatory diseases. In
addition, physicians can access detailed summaries of REMICADE clinical
data and interactive tools to manage and customize information for
discussions with patients.

"We recognize that health care conversations have become increasingly
complex over the past few years, with physicians being faced with an
escalating volume of information about drug benefits and risks from
numerous sources," said Thomas Schaible, Vice President, Medical Affairs,
Centocor, Inc. "We hope MEDVERSATION will play a role in helping physicians
access information on disease states and clinical data about REMICADE, to
enable them to more readily participate in dialogue with an increasingly
more informed and empowered patient population. We want all patients to
receive treatment that it is right for them, regardless of whether or not
the treatment may be ours."

Centocor created MEDVERSATION with the belief that informed
conversations between health care professionals and patients diagnosed with
serious inflammatory diseases are essential to quality care. To that end,
Centocor has attempted to construct a useful resource for physicians to
consider the multiple dimensions of individual medical decisions that
involve our therapies now and in the future.

Content within MEDVERSATION is organized into four main sections,
paralleling the core dimensions of a medical conversation:

-- Natural History of Disease: Provides a wide array of research on and
data for rheumatoid arthritis, Crohn's disease, ulcerative colitis
and psoriasis.
-- Benefits of Treatments: Provides extensive clinical data, including data
from Phase IV trials, about the benefits of REMICADE.
-- Risks of Treatments: Provides extensive clinical data and post-marketing
experience regarding the potential risks of REMICADE.
-- Benefit:Risk Analysis: Helps physicians interpret and better understand
benefit and risk information.

In addition to these four content areas, MEDVERSATION offers:
-- Content update email alerts.
-- Customizable handouts about disease progression and the benefits and
risks of treatment.
-- Consumer-friendly content.
-- A personal library where physicians can bookmark and organize articles
and topics of interest from across the website.

MEDVERSATION will be frequently updated to provide new data and
information as it becomes available. Currently, MEDVERSATION includes
information regarding REMICADE and its approved uses in the treatment of
Crohn's disease, rheumatoid arthritis, ulcerative colitis and psoriasis;
information for additional approved uses in the treatment of ankylosing
spondylitis, psoriatic arthritis and pediatric Crohn's disease will be
added over time. In addition, pending the approval of investigational
therapies from Centocor, new content will be added to MEDVERSATION.

I haven't explored the site yet and I would be interested in your opinion if you have one.

Vote for New FDA Commissioner: Let Obama Know

Who Should Obama Nominate for FDA Commissioner?

It seems like everyone in the Pharma Blogosphere and the press is recommending who president-elect Barack Obama should nominate -- when he becomes president -- as the new FDA Commissioner to replace Dr. Andrew von Eschenbach (see here for comments from the pundits and press).

The following list presents the major contenders the pundits have identified.

* Robert Califf, vice chancellor for clinical research and professor of medicine in the Division of Cardiology at Duke.
* Dora Hughes, Health Policy Advisor to Senator Barack Obama.
* David Kessler, former FDA Commissioner.
* Steve Nissen, cardiologist at Cleveland Clinic.
* Mary Pendergast, industry consultant who was a former associate FDA Commissioner under David Kessler.
* Peter Rost, former Pfizer VP of Marketing, now a blogger.
* Joshua Sharfstein, commissioner of the Baltimore City Health Department.
* Mike Taylor, former Deputy FDA Commissioner under Clinton
* Susan Wood, the former head of women̢۪s health at FDA, who resigned in protest after the delay in switching the morning-after pill over-the-counter.
* Janet Woodcock, Center for Drug Evaluation & Research Director

Please take a few minutes to tell me who you think President-elect Obama should nominate as the new FDA Commissioner. If you don't like any of these choices, you can write-in your own candidate!

Take the survey here.

You can learn more about the contenders mentioned above when you access the survey site. After completing the survey, you will be able to see a summary of the results (de-identified to protect respondents anonymity).

Results of this survey may be summarized in Pharma Marketing News.

Your comments are confidential (anonymous) unless you specifically provide your contact information at the end of the survey and allow us to attribute comments to you personally.

See the Pharma Marketing Surveys Forum and the post "SURVEY: Who Should be FDA Commissioner?" for news and opinions about who the new FDA commissioner should be.

Monday, November 10, 2008

Fewer Sales Reps Lead to Higher Costs

We all know about pharmaceutical sales reps being laid (off, that is). Like you, I assumed that these layoffs would save pharmaceutical companies oodles of money. It turns out, however, that while the number of sales reps has declined in recent years, the drug industry may actually be spending more money than before to maintain fewer reps in the field!

How is this possible?

Simple. The increase in sales rep compensation more than offset the savings from laying off reps. It seems like lower-paid, under-performing reps are first to go.

Here's the data:

A short while ago, I reported that the average pharmaceutical sales rep earned $94,200 in total compensation in 2007, compared with $87,500 in 2006. This was an estimate made by the National Association of Pharmaceutical Sales Representatives (see "'Friendly' Pharma Sales Reps Earn More Bucks with Fewer Sales Calls!").

In the November, 2008 issue of MM&M I found a chart in an article on closed-loop marketing that quantifies the recent decline of pharmaceutical sales reps (see below).

Between 2007 and 2006, the number of sales reps in the pharmaceutical industry decreased by 3.7%. In contrast, the total average compensation for reps increased by 7.1% during that period (cf: the 2007 inflation rate in the US was 3.2%). That means that 94,308 reps in 2007 were compensated $8.883 bn in total whereas 97,963 reps in 2006 were compensated $8.572 bn. In other words, the total compensation increased 3.6% while the number of reps decreased by 3.7%!

As I pointed out in the post cited above, reps are making 11% LESS details while getting 7.1% higher compensation! No wonder the drug industry is looking to technology like closed-loop marketing (see Pharma Marketing News reprint #73-04).

Speaking of details, a table in the MM&M article cited above reported that the total number of pharma details in 2008 was 92.93 million (see chart below for # of details of the top 10 pharma companies).

A question I'm often asked is How much does a sales rep call cost?

Let's say that in 2007, the total number of details was 104.4 million (assuming details decreased by 11% between 2007 and 2008 just as they did between 2007 and 2006). Reps were compensated $8.883 bn for these 104 million details. That's $85 per detail. If the average rep makes between 2 and 3 details per call, then the labor cost per call is $170-$255. This estimate does not include non-labor costs like cars, gas, and other sales expenses (including free lunches for physicians), etc.

Over at Pharma Marketing Forums, I once tried to get an estimate of the total cost of a sales rep call (see "What Is Average Cost of Sales Call?"). A poll of readers of that discussion thread suggested the cost was somewhere between $201 and $500 per rep sales call.

I welcome feedback from readers on my math.

Friday, November 07, 2008

Pfizer Relpax Rep Rejected, Then Welcomed When He Offered Free Samples for Doc's Personal Use

Free drug samples that pharmaceutical sales reps give to physicians are supposed to help patients who cannot afford the prescription and/or to test if the product works on a particular patient.

Of course, we all know that free samples are the drug rep's last great hope of gaining access to physicians after the distribution of freebies -- pens, calendars, clocks, etc. -- comes into disfavor on January 1, 2009.

It's not clear whether or not free drug samples help uninsured patients afford their medication (see "Drug Samples: To those that have, it shall be given. The rest pay list price!"), but what IS clear is that many physicians and their office personnel divert free drug samples for their own use. Such diversion is unethical and may even be illegal.

How do I know this happens? For one thing, it is often discussed at industry conferences I attend. But it is never suggested that sales reps encourage the practice.

Today, however, I witnessed a Pfizer Relpax rep actually leave samples of his product with my physician's office receptionist and tell her it was for the doctor's own personal use.

Readers of Pharma Marketing Blog may recall that I often practice the art of sales rep watching while at my GP's office (see "Basics of Sales Rep Watching"). Today was a good day for this.

But little did I realize when I walked into my doctor's office for a routine blood test and flu shot that I would witness a possible crime being committed by a Pfizer sales rep.

The rep was new at the job or this territory -- this was only his second or third visit to my doctor's office. He was older -- not the typical fresh-faced youngster I often see there. Maybe that's why the receptionist at first rejected him with what I thought was a totally made up excuse: the doctor had a migraine headache and asked that all reps come back next week when she would be feeling better.

Maybe the receptionist didn't recognize the rep because he was new to her or maybe she did not see his name tag, which clearly identified him as a Relpax rep. Or maybe she just didn't know what the hell Relpax was. Whatever. Her excuse, however, opened up a door for the Relpax rep to walk straight through, figuratively speaking.

"Oh that's so terrible," said the rep. "But I would feel so guilty if I left without leaving these samples for the doctor. It would be like leaving the scene of a fire with a fire extinguisher. I know she'll feel better afterward."

Clearly, the guy was suggesting that the samples were for the doctor's personal use.

He was then welcomed to leave the samples and wait for the doc's signature!

BTW, I noticed that there were no Replax tchotkes in the office, nor Pfizer-sponsored migraine patient pamphlets. I did notice, however, GSK migraine patient education material and promotions. I wonder if my doc will switch from Imitrex -- GSK's migraine product -- to Relpax for her personal use? Such personal use, however, isn't likely to increase her Relpax prescribing, which assuredly is unbiased by samples she may have used to treat herself!

Interestingly, I was able to find the fire extinguisher analogy on, which appears to be an independent guide to prescription drugs. Here's what they say about migraine treatment:
"In fact, the situation with migraine treatment may be compared with fire safety: you can always keep a fire extinguisher in your room for emergency cases and, of course, you can regularly follow certain rules, like to keep electric wiring in proper condition and does not forget to switch off the electric iron before going to the pub. In this example, fire extinguisher may be compared to the abortive migraine treatments, which become helpful in case of emergency (migraine attack); and following fire safety rules is somewhere close to preventive migraine treatments, which are used in order to lower the risks of emergency cases." (See "Migraine Management: To Abort or To Prevent?")
I wonder if Relpax sales reps routinely use this analogy when pitching to docs?

FDA Intern Supports Peter Rost for New FDA Commish!

Yes, it's FDA Intern! Strange visitor from an Ivy League school who came to FDA with powers and ability far beyond those of Janet Woodcock or even FDA commish Andy von Eschenbach!

FDA Intern! Who can change the course of mighty clinical trials, approve drug ads faster than a speeding bullet, jump through Congressional Subcommittee hoops of fire and ire, and who disguised as Emily Jameson (no relation to Jenna Jameson), mild-mannered intern for a great regulatory agency, fights a never ending battle for fast-track drug approvals, pharmaceutical company user fees, and the FDA way!


Like most FDA employees these days, FDA Intern has had problems with her paycheck and also with the direction that the FDA has taken in the dark years under the Bush administration. And like most Americans, she yearns for a change she can believe in!

One change that she may be able to help bring about is the selection of a new FDA commissioner. We join FDA Intern as she reviews past Congressional testimony for likely candidates to fill the role of commissioner.

*Creepy Andy: you might recall episode #3 when FDA Intern hinted of hanky-panky in von Eschenbach's office (see "FDA Intern Gets Her Bonus!").

Click on image to enlarge for better reading.

Click on image to enlarge for better reading.

You can read more about Rahm Emanuel's glowing opinion of Rost on the Peter Rost Blog.

P.S. Vote for New FDA Commissioner: Let Obama Know

Thursday, November 06, 2008

Eeyore: a Jackass Marketing Gimmick

Ed Silverman over at Pharmalot posted the following item ("Tiggergate: Using Disney Icons to Sell Seroquel"):
"How is this for creative selling? An AstraZeneca regional sales manager allegedly directed the sales reps in her region to use some of Winnie the Pooh’s well-known friends - specifically, Tigger and Eeyore - to promote the Seroquel antipsychotic.

"We are told the idea was conveyed at a national sales meeting and on field rides with sales reps, who were told to use Tigger as a bipolar patient and Eeyore - the down-in-the-mouth donkey - as a depressed patient. The reps were allegedly encouraged to use Tigger dolls as giveaways, for instance.

"Whether any of the reps actually did so is unclear. Nonetheless, an AstraZeneca spokesman tells us that the drugmaker is “investigating the allegations,” although he adds that “it wouldn’t be appropriate to comment further, because it is an open investigation.”

"Who knows what lurks in the 100 Acre Woods?"
To answer that question, I visited 100 Acre Woods, aka the AstraZeneca (AZ) Cafe Pharma discussion board and came upon this anonymous posting: Why is Seroquel getting killed by Abilify:
"Why is Seroquel getting its ass handed to it by Abilify? What the hell is happening anyway?"
To which a couple of anonymous reps made these replies:
"because our RSDs are jackasses and the one ASD that is left is a total j@*koff and the brand team idiots nobody even knows who the f@#k they are - so sh$@ty sales leadership and invisible marketing"

"Clueless marketing - plain and simple."
Mystery solved. Eeyore is a jackass marketing gimmick concocted by the the clueless, jackasses on the Seroquel brand marketing team!

King of the Hill Blasts Social Network Marketing: Lessons for Pharma

The first chapter of the best selling book groundswell asks and answers the question "why the groundswell -- and why now?" Groundswell does not refer to the rock band of that name, but to the phenomenon of customers defining brands and companies in the social web by talking about them on Facebook, writing about them in Wikipedia and blogs, and posting user-generated videos on YouTube.

To illustrate the power of this groundswell, the authors cite a sci-fi story -- Microcosmic God -- written by Theodore Sturgeon in which a scientist creates a rapidly evolving race of three-inch-tall creatures called Neoterics. Neoterics experience a generation in about eight days. That proved very useful to the scientist who studied how his creatures invented solutions to problems to which he exposed them.

In fact, the scientist used what he learned to create commercially successful inventions in the real world, which is the object lesson: the world of the Neoterics is an "apt metaphor for the current state of the Internet. Web 2.0 technologies and the masses of people who connect to them allow for more rapid prototyping, failure, and adaption," say the authors of groundswell.

There's only one problem: the inventiveness and technology developed by the Neoterics are subverted by evil forces to take over the world! Or so we are lead to believe.

Could social networking in the "real" world also be a force that can lead to the downfall of companies that engage in social media marketing?

This is a question not often discussed at pharmaceutical conferences and trade publications in which enthusiastic pundits encourage pharmaceutical marketers to get more involved with social networking in order to connect with a new generation of customers -- physicians, consumers, and patients -- who frequent social networking sites on the Internet.

The drug industry, however, is slow to get involved and this frustrates many new media mavens who stand to profit from greater pharma involvement in social media.

There are many unique regulatory, cultural, and other barriers that the highly-regulated pharmaceutical industry must overcome to be more engaged with customers online. I have often mentioned these barriers in posts to this blog, in Pharma Marketing News articles, and surveys (see, for example, "Social Media Marketing Not All It's Cracked Up to Be" and "Social Media Pharma Marketing: Damned If You Do, Damned If You Don't?" and "Rate Your Social Media Marketing Readiness" - a self-assessment tool for pharma marketers).

But even less-regulated companies like propane and propane accessory distributors can get into trouble with social networking. Strickland Propane is a case in point. For those of you who do not indulge in Fox Network's Sunday night lineup of animated sitcoms, Strickland Propane is where Hank Hill works on the King of the Hill show.

The latest episode of this show, entitled "Lost in MySpace," thoroughly discredited social networks as a resource for promoting a business and its products.

It all started when Hank lost a customer who befriended a competitor on MySpace. The competitor and the customer both liked something called "Weezer." Turns out that both Hank and I were totally unaware about this band: "What's Weezer?," asks Hank. "Exactly," says the lost customer as he drives away with a tank of propane from Hank's competitor.

Poor Hank. He believed in good customer support and a written "sell sheet" to inform people and build Strickland's propane business.

But Mr. Strickland ripped Hank's "sell sheet" off the wall and ordered him to get Strickland on MySpace. Having support at the highest level of your organization is the number 1 piece of advice consultants give to marketers who wish to get involved with social networking. Hank's mistake was to empower Donna, the only Strickland employee who knew anything about social networking, to put Strickland on MySpace.

Buxom Donna was happy to oblige. "It sure beats the rest of the crap I have to do around here." By "crap" Donna means keeping the books.
I suspect that in the past, this was how some marketers within pharmaceutical companies became "eMarketers" and lead the charge within their organizations to do more on the Internet. These "Pharma Donnas" have long since left the scene and many have become independent consultants focusing on eMarketing.
"I don't know why Strickland is on MySpace," says Hank. "The whole thing is a contest to see who can make the biggest ass of himself."

Ass or no ass, things seem to go fine at first. New customers like "alan252" were coming in and buying propane and propane accessories after seeing Enrique on Strickland's MySpace page. "I guess this MySpace thing is working," says Hank. Little did he realize where it would all lead.

Hank began to realize there might be problems when he saw employee videos on the Strickland MySpace page. Joe Jack, for example, was doing something so obscene with a propane tank that not even Fox Network would show it on prime time TV (also not on the Web site)! And Donna's video featured her drunk and dancing in a bar. Later, some weirdo comes in to buy a propane tank that Joe Jack "freaked."

Strickland Propane's MySpace Page

Donna's Drunken Dance Video on Strickland's MySpace Page

Hank doesn't like it at all. When he confronts Donna she says "you think I'm just a number cruncher and cannot do creative things." Hank wants Donna to shut the site down, but Mr. Strickland is enamored of the site and says "Nothing attracts customers more than fun."

Poor Hank just doesn't get it when he complains that there is nothing on the site about the products they sell.

Despite Hank's complaints, Strickland makes Donna the Assistant Manager of New Media. Donna's first project in her new position is to create a video of an employee getting "kicked in the ding dong."

Donna is so focused on MySpace that she cannot bring herself to helping a live customer in person and tells the customer to go to Strickland's MySpace page ("") to get answers instead.
This sounds a bit like closed-loop pharmaceutical marketing (CLM) where sales reps hand over the stylus of a tablet PC computer to physicians so that they can navigate through all the information and find what they want. It seems to me that CLM is designed not so much to help physicians get the information they need, but to help the pharmaceutical company get the information IT needs (about physician preferences) and deliver more details with less reps and less real reps.
Meanwhile, back at Strickland Propane, things get out of hand when some of Donna's MySpace friends arrive at the corporate office to beat up Hank for calling Donna an idiot on his MySpace blog. Of course, this is a no-no in social network etiquette -- I mean calling someone an "idiot," not the physical threat of mob rule. But it's Mr. Strickland who suffers and that's when Hank fires Donna.

There's more drama as Donna implements an online anti-Strickland campaign. Eventually, however, Hank negotiates a truce with Donna, rehires her and gets her to launch a convenient Web 1.0 site that features a non-interactive, non-flashy version of his "sell sheet" (shown on left).

And, unlike the sci-fi story mentioned above, everyone lives happily ever after.

You can view the full episode here.

Wednesday, November 05, 2008

Pharma Marketing Blog Reader Survey Predicted Obama Win

It's official. Barack Obama will be the 44th president of the United States!

The official election results as of today shows that Obama received 52% of the popular vote vs. 46% for McCain.

The economy -- we are told -- played a large role in undermining the McCain campaign while bolstering Obama's chances of winning.

Results of the "Who's Better for Pharma: McCain or Obama" survey of readers of this blog -- many of whom work within pharmaceutical companies and live in NJ and PA -- more or less accurately predicted the outcome of this election as far back as September 19, 2008, which was just before the financial crisis hit.

At that point in my survey, 53% of the 153 US respondents indicated they would for Obama, whereas 36% intended to vote for McCain. About 10% were undecided.

After September 20, 2008, there was a significant shift in favor of Obama as shown in the chart below.

From these results, it seems that US-based vendors selling products and services to the pharmaceutical industry were most influenced by the financial crisis.

Before September 20, 2008, 56% of US vendor respondents favored Obama vs. 37% who favored McCain. US vendors responding to the survey AFTER September 20, 2008 favored Obama over McCain 66% to 24%. This difference was significantly greater than that observed for people working within drug companies.

The worsening economy is likely to affect smaller vendor companies to a much greater extent than large pharma companies that have oodles of cash on hand. Sure, we're seeing layoffs at pharma companies. But so far I'm not hearing much from pharma vendor companies in terms of layoffs. I'm sure it's happening.

From the comments I received, many survey respondents said their choice had more to do with changing the overall direction of the country than with how it would benefit their own personal financial condition. It's a 180-degree shift away from thinking that what's good for business -- whether it's GM or Pfizer -- is good for the US.

Tuesday, November 04, 2008

An Experiment: Ban All DTC Broadcast Advertising for One Year

At last week's "DTC in the Era of Consumer Choice" conference hosted by DTC Perspectives magazine, Hugh O'Neil, VP and Head of Market Access at Sanofi-Aventis, gave the audience a bit of a preview of PhRMA's new Guidelines for Direct-to-Consumer (DTC) Advertising.

It appears that PhRMA's members are likely to agree on a DTC advertising moratorium for newly approved drugs. O'Neil said there was a debate about the exact length of the moratorium -- whether it should be 6 months, one year, or longer. Bob Erhlich, chairperson, commented that most DTC campaigns do not begin until 6 months after launch anyway and a 6-month moratorium, therefore, would not be a change from current practices. Most people, therefore, expect PhRMA to recommend a 1-year moratorium.

What is often missing in the debate about DTC advertising and whether it should be banned or delayed 1 or more years is the contribution that DTC advertising makes to the overall Rx drug sales number and the drug industry's bottom line.

I got to thinking about about this when another presenter -- Dan Jaffe, Executive VP of Governmental Relations at the Association of National Advertisers -- said that a DTC moratorium could result in billions of lost sales. But would a moratorium hurt profits?

First, let's just get an idea of what the size of the US Rx drug market is in terms of annual sales.

According to the IMS Global Pharmaceutical and Therapy Forecast™ released last week by IMS Health, the U.S. pharmaceutical market, the world’s largest, is forecast to grow 1 - 2 percent to $287 - $297 billion, down from the 2 - 3 percent rate expected earlier this year. Contributing to the slower growth is less-than-expected demand for recently introduced products, as well as the economic climate, which appears to be having an impact on doctor visits and pharmaceutical sales.

From these numbers I calculate that currently the drug industry enjoys about $284 billion in sales of Rx drugs in the US per year. I recently saw from a chart in an oil industry PSA that the drug industry profit margin is about 20% (compared to 8% for the oil industry). Therefore, I calculate that the drug industry makes a profit of $57 billion on $284 billion in sales.

Against that, consider that the drug industry spends about $5 billion in DTC advertising. Assuming that the ROI for this spend is around 2.0, that means that DTC advertising drives about $10 billion in sales. That's 3.5% of the total sales in the US.

In other words, if DTC advertising were banned, US Rx sales would decrease to $274 billion. Using the the same 20% profit margin estimate, these sales would yield about $55 billion -- a loss of $2 billion in profit.

But the $5 billion saved by eliminating DTC could be added to the bottom line and more than offset this loss!

In light of this, it hardly seems worth all the bad publicity for the industry to save DTC. Pharma's bottom line would not be affected and could actually be higher if the $5 billion were spent on more effective types of promotion (via the Internet, for example).

What I propose is an experiment. Let's eliminate TV broadcast DTC advertising altogether for one year, but keep print and Internet-based DTC advertising. That is, no broadcast DTC for ANY drug, new or old.

Drug companies could pocket the money saved or spend it on print and Web promotions, which are not a target of DTC critics in Congress and elsewhere.

What do you think would happen?

Sure, TV networks that run DTC ads and agencies that produce the ads would lose money. But drug companies can do what they do in other parts of the world: produce disease awareness, non-branded TV ads. That would help keep TV and agency people employed.

Eventually, drug companies will have to shift spending away from TV anyway. According to Bob Erhlich, this is already happening, but at a snail's pace. Erhlich estimates that TV accounts for about 60% of the industry's DTC budget, down from 66% a few years ago. At that rate the industry won't reach 0% spending on TV DTC until 2040!

What the industry needs now is real change it can believe in!

Point of clarification: Tracy Staton of FiercePharma reported: "John Mack at the Pharma Market Blog puts a pencil to paper and finds that cutting DTC ads off television would save pharma $5 billion--and that savings would offset the resulting $2 billion hit to the industry's bottom line." (See "Do TV ads cost more than they're worth?").

Just to clarify: cutting all broadcast TV DTC advertising would save about $3 billion, not $5 billion. That's because TV represents about 60% of the average DTC budget (60% of $5 billion, which is the total ad spend on DTC per year for ALL brands, equals $3 billion; QED). Still, $3 billion added to the bottom line is enough to offset the $2 billion loss in profit if there were no TV ads. Actually, since there would still be DTC print and Internet advertising, the profit loss would be less than $2 billion.

Another way to do the analysis: If you cut $3 billion in TV spending from the DTC budget, sales might drop by $6 billion to $278 billion. That's a drop of $1.2 billion in profit (20% of $6 billion). The $3 billion in savings would more than make up for that loss.

Monday, November 03, 2008

New Disease Facing Drug Industry: Election Anxiety Disorder (EAD). Is It Justified?

Pills you can take for EAD (courtesy of The Stranger: "Rx for Election Anxiety Disorder").

Tomorrow, of course, is election day here in the USA and it seems that the pharmaceutical industry is, for the most part, shrugging it off as of very little consequence one way or the other. There is, however, some anxiety.

Dan Jaffe, Executive VP of Governmental Relations at the Association of National Advertisers, said at last week's DTC Perspectives' DTC in the Era of Consumer Choice Conference, that the drug industry and its advertising partners are facing a new disease: EAD or Election Anxiety Disorder.

But Jaffe reminded the audience that there is anti-business rhetoric from both sides of the aisle and he summarized who in Congress is against the industry and who is for it in his presentation at the DTC conference.

Mark Senak, Eye on FDA blogger, said in his presentation that "what happens on Tuesday is of very little consequence to the drug industry." Yet he also said that pharmaceutical marketing will not be recognizable three years from now because of the new regulatory environment likely to be ushered in by this election.

Senak made this argument: due to the leadership void and low employee morale at the overwhelmed FDA, Congress feels the need to step in and "micromanage" the agency (eg, see "FDA Paralyzed: Who Will Protect Us?").

The FDA void, according to Senak, is part of the "virtual shutdown of the domestic government" wrought by the Bush administration. Members of Congress, contends Senak, are "extremely anxious" about the "dramatic drop off of enforcement of domestic laws." Senak cited the dearth of warning letters from the FDA to prove his point.

Senak, like Jaffe, reminded the audience that much of this legislative push to micromanage the FDA is bipartisan -- coming from both sides of the aisle (eg, Grassley-R and Stupak-D in the Senate).

So why is tomorrow's election of little consequence for the pharma industry, yet there remains anxiety? On the little consequence side is the fact that none of the powerful "anti-pharma" senators is up for re-election tomorrow. On the "anxiety" side is the fact that all 435 seats in the House of Representatives are up for re-election. Democrats -- who favor more regulation and reforms to Medicare Part D -- are expected to gain many seats in both houses of Congress.

Meanwhile, the majority of US pharmaceutical company employee respondents to my "McCain vs. Obama: Who's Better for Pharma?" Survey favors Obama over McCain 54% to 31%. You can still take that survey and let me know how you will vote tomorrow.

P.S. If you suffer from EAD, you can find some Rx remedies here.
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