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GfK Healthcare | July 2010 | |
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What Is Really Happening Out in the Marketplace?  When it comes to data on which major decisions are made, the pharmaceutical industry can be a funny place indeed. In many ways, we are consistent with the saying that “Things that are important are usually difficult to measure, while things that are easy to measure are usually not important.” Nonetheless, a growing number of databases has populated the landscape, and decision makers insist on getting their numbers as quickly as possible. More specifically, many of the most important budget decisions made in the pharmaceutical industry pertain to the size and allocation of promotional spends aimed at physicians. Moreover, many of these decisions are based on audits and/or self reports from pharmaceutical sales representatives (PSRs) about the number, length and nature of their interactions with physicians. That having been said, a moral hazard clearly exists here, with PSRs wanting to appear as busy, productive and impactful as possible. Additionally, many of the sales managers in the home office are former PSRs themselves, and thus are biased toward viewing what is happening in the field today as paralleling what they were able to do 20 years ago. They also have the moral hazard of wanting to believe that their carefully selected, carefully trained and well-compensated sales force is effectively representing their products. Megabucks are spent in this promotional channel every year, with the outcomes of this expenditure carefully tracked. By numbers! But what if the numbers don’t really mean what they are purported to mean? Many call reporting systems and sales force effectiveness evaluation programs were established years ago, in a quite different environment. Many more new drugs were entering the marketplace, government regulations as to what PSRs could do in doctors’ offices were largely limited to ensuring that drugs were promoted for the right indications and to using approved materials. Thus doctors had much to learn to keep up with new product introductions and much benefit to be gained by being nice to representatives who could arrange for them elaborate dinners, golf outings, speaking honoraria, etc. But then was then and now is now. Far fewer new drugs are entering the marketplace in the new millennium, and most of those that do enter are merely modifications of existing entities rather than genuinely new drug classes. Thus, rather than teaching physicians about new classes of drugs, PSRs are left to give reminder details for products already quite familiar to, and already chosen to be used by or not to be used by, the majority of physicians. Moreover, the marketing practices of pharmaceutical companies and other health care manufacturers have come under far closer scrutiny by federal and state regulators, for all intents and purposes eliminating the ability of PSRs to “buy” physician loyalty and product use. Given this environment, as well as the ubiquity of multitier insurance co-pay programs that charge patients significant amounts if a branded (read promoted) product is used and little or nothing if a generic product is dispensed, physicians’ willingness to interact with PSRs has declined significantly. More specifically, greater numbers of physicians are reporting a total unwillingness to see PSRs, and those who are seeing them focus increasingly on obtaining samples and decreasingly on obtaining information. In fact, physicians are reporting that even the value of samples is being greatly reduced by their awareness that a sample of a brand, followed by the pharmacy dispensing a generic, can cause significant patient confusion. Given increasing pressure on their time – and their incomes – from other vectors, it would be little wonder if physicians refused to dedicate large blocks of time for interacting with representatives. As a nontrivial aside, the ability of physicians to obtain needed information from the Internet and other e-sources, such as Epocrates, and do so on their schedule and with the convenience of a PDA or smart phone, has also decreased the need for personal interactions with sales representatives. Given these factors, some of our clients have gone back to basics, and have begun to explore, through observation, what is really going on in the field. What they are finding is quite predictable given the discussion presented above, in that while the data still indicate a robust level of sales activity happening in the field, what one sees in actuality is very different. More specifically, while pleasantries are often exchanged with the physician and inquiries about samples discussed, in only about three-quarters of physician visits is a product even mentioned. Encounters are often only two minutes or so in length, so that the likelihood of the carefully planned and budgeted second and third position details actually being delivered is extremely slight. Given all of this, it is still argued by many that more reported details and product sales tend to go together. Left out of this evaluation, however, is the fact that most of this evidence is correlational in nature, thus leaving open the possibility that receptive, product-positive physicians are causing the number of details to go up, rather than the other way around. In brief, it seems like a propitious time to fundamentally reconsider the promotional activity and activity measurements directed by the pharmaceutical industry toward physicians and other prescribers. Since the good old days of pharmaceutical marketing, when promotion consisted of nothing but detailing, journal advertisements and direct mail, things have changed rather substantially. Journal advertisements, long recognized as an attention grabber or reminder but never as a persuader, have been substantially reduced in volume, with several journals closing up shop as a result. Similarly, the quantity of direct mail received by many physicians that goes unopened has caused a significant reduction in the reliance on this medium. Last but not least, the longstanding arms race in PSRs, in which drug companies worked assiduously to outgun their competition with greater reach and frequency of sales visits, has been replaced in many companies by significant reductions in sales force size. Some tested the waters in this regard by cuts of 10 to 15 percent, while others have gotten far more aggressive, either by reducing their field force by much larger numbers and/or by substituting telephone representatives, online sampling programs or other channels of promotion. In summary, it is well past the time when we should be blindly using the same promotional evaluation instruments and models as we have for decades, and high time that we consider new tools for evaluation. The promotional environment has changed substantially, as has the mix of promotional tools available. Against this backdrop, it is time to fundamentally rethink how we approach our customers to support the use of our products, and how we should go about evaluating the return on investment realized by our array of promotional interventions.  Richard B. Vanderveer, Ph.D. CEO, GfK Healthcare   |