January 17, 2014

Is Pharmaceutical Promotion a Dinosaur Looking for a Tar Pit?

by Helen Kalra, Associate Managing Director; Joe Knott, Managing Director

The Canadian pharmaceutical industry has seen and weathered a great number of changes over the years: patent loss and restoration and blockbuster drugs with multiple sales forces deployed to increase both the size and the share of the pie, just to name a few. In the past, significant promotional expenditures enabled journal advertisement splashes, large conferences, and expensive “educational events.” The patent cliff/loss of exclusivity, accelerated by generic market uptake and a lack of pipeline replacements, especially in an environment where very few are able to pay for new medications due to budget constraints, has led to dramatic reductions in both personnel and available promotional dollars in pharmaceutical promotion.

Two events, however, that have had an even greater impact on the industry than the changes cited above are: 1) heightened corporate governance and 2) changes in provincial regulations that allow the prescription and/or selection of drug therapy to be applied to a wide number of emerging health care audiences. Governance initiatives are, indeed, more draconian than the recent updates and changes to both the Rx&D Code of Ethical Practices and the PAAB Code of Advertising Acceptance, which were both long overdue and, in most cases, are being followed by the industry.

The increased focus on governance is primarily driven by erosion in the way the industry operates in the US where pharmaceutical companies agreed to pay the majority of $5.5 billion in settlements with the US Department of Justice last year. There are a growing number of pharmaceutical companies that have a Corporate Integrity Agreement with the American Justice Department. This has pushed the governance pendulum to the extreme of the conservative side. The Canadian market is, indeed, very different from the US market, and current guidelines, if properly followed, are more than enough to ensure appropriate pro- motion practices. The majority of all education is now managed by, or signed off on, by medical departments. The activities that sales and marketing departments can participate in, outside of detailing and/or promotion, are closely scrutinized.

The emergence of new health care provider audiences are being fueled by provincial regulation changes as well as funding mechanisms. The Pan- Canadian Purchasing Alliance listing, generic price setting, and private payers savings programs are seeking to reduce expenditures. In our view, they are already “prescribing,” or rather selecting, through innovatively tiered pricing initiatives.

Emerging Product Selectors

Governments are passing legislation to allow more product selection activity by both new and established health care providers. Pharmacists are probably the most affected, as they have always been an under-utilized triage partner, when it comes to medication selection. Increased regulatory responsibilities, combined with incremental funding by the provinces are incenting pharmacist to take on a greater role in patient care. These regulatory changes in the scope of pharmacy practice are being followed by payment for the first time. This should change the pharmaceutical industry’s focus from the product prescriber to the product selector.

All is not doom and gloom. This is an industry of science and patient focus, isn’t it? Clinical research and resulting submissions for new drug approvals have improved significantly over the past few years. The industry is killing products more often and at earlier stages in development. Science and strong data will be the cornerstone to future brand pharmaceutical success. A strong skill set of innovative brand prelaunch and launch planning will continue to rule the day. Audience segmentation (both by type and geography) and targeting resources accordingly will ensure brand pharmaceutical success.

Get in touch with us for more information on this topic.

Originally published in Canadian Pharmaceutical Marketing November/ December 2013

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