Marketing of Drugs, by Pharmaceutical Companies - Essay Example

Marketing of Drugs, by Pharmaceutical Companies Outline: This paper looks at the shifting marketing practices of pharmaceutical companies, as theytry to grab a larger share of the market for drugs. By doing so, they attempt to rake in larger profits at the expense of the ethical marketing practices that were the hallmark of the pharmaceutical industry in earlier times. This paper will attempt to provide the various unethical practices that have become a part of the marketing strategy of the drug companies, and analyze the impact on the doctors, who prescribe these drugs, as well as the patients, who are the ultimate consumers. By presenting these aspects of the marketing perspective of the pharmaceutical industry this paper attempts to come to the conclusion that in the final outcome of these marketing practices it is the care of the patients that is negatively affected. Introduction: Market conditions have never been so good for the pharmaceutical industry. The amount of money spent in the United States of America on prescription drugs was a whopping $141 billion in 2001, as per figures provided by the CMS Office of the Actuary. This expenditure on prescription drugs has made it the third largest factor in the expenditure on national health care in the United States of America. In 1990 for every dollar spent on health care, prescription drugs made up six cents. The proportional expenditure on prescription drugs has shown a significant rise by 2001 to ten percent. By 2010, this proportional expenditure on prescription drugs is expected to rise to 14.2%, more than doubling, in a period of two decades. There have been several factors that have contributed to this remarkable growth in spending on prescription drugs. These factors are the increased use of prescription drugs, an aging population, development of new therapeutic agents for the treatment of chronic ailments, increasing consumer demand for prescription drugs, and the escalating cost of drugs. Unfortunately these good times have not made the pharmaceutical companies satisfied with the profits that this extra demand for prescription drugs would generate from their existing market share of the expenditure on prescription drugs. Instead the lure of raking in profits has made the pharmaceutical industries attempt to carve out a larger share of the pie, in terms of the prescription drug market. This over emphasis on profits has caused a change in the marketing practices of the pharmaceutical companies. Instead of the marketing practices being focused on business ethics, which is necessary in a market that is concerned with the health of the citizens of the country, they are now focused on any means and methods to enhance their market share, and the prices of their products, in an attempt to maximize the profit taking from people who have ailments, and many of whom find it difficult to meet the cost of their medication and treatment. (Waltz, A.J., 2003). The Shift in Focus: Research and development of newer drugs to provide for better care of the sick was the focus of pharmaceutical companies in earlier times. The last two decades has seen the focus of the pharmaceutical companies shifting to the marketing of their products, and research and development has been relegated to the background. The less emphasis on research and development has meant that the pharmaceutical companies repackage earlier drugs in newer forms, and make them available in the market at higher prices. Newer medicines that come into the market are also grossly overpriced in an endeavor to make the maximum profit out of them. This has made the pharmaceutical companies more of a marketing enterprise with the sole focus on deriving profits, and little concern on the products and price of the products that they make available in the market. There may be arguments that profit making is the nature of a business enterprise. Granted that it is so, but the pharmaceutical industry is a partner of the healthcare industry, and there should be better ethics in the profit taking of this business enterprise. In fact, to the contrary, the pharmaceutical companies pale their counterparts in other sectors of industry in profit taking. There were ten pharmaceutical companies in the Fortune 500 had a combined profit of $35.9 billion. The rest of the 490 companies in the Fortune 500 from other sectors of business together managed a combined profit of $33.7 billion, which was less than the combined profit taking of the ten pharmaceutical companies. Some consolation for the sick! With some much of wealth in their hands, and an aggressive marketing stance the pharmaceutical companies are capable of removing any hindrance to their drive for raking in profits. This includes the legislature, FDA, the medical centers and the medical profession itself. No longer are there any ethics left in the marketing strategies of the pharmaceutical companies. (Angell, M.) Drug Patents and the Monopoly Game: Generic drugs offer twin benefits over branded products that provide the same drugs. They provide for competition, the price regulator, and therefore generic products cost much less. The second benefit is with more players in the field, availability of pharmaceutical products is also much better. (How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry). These are benefits for those seeking healthcare, and not for the large pharmaceutical companies, and therefore needed to be brought to an end. To this end came the demand from the large pharmaceutical companies for product patents. This they demanded was necessary so that they could recover the costs that were spent on the research and development for newer drug products. Demands that appear reasonable, and have since then become a reality. This has led to patented drugs becoming extremely expensive, and confirming the growing impression that that the large pharmaceutical companies recover amounts that are far in excess to the amount they have spent on research and development. Research by the pharmaceutical industry into the estimates of the cost of research and development for a new drug has indicated that this cost is in the range of $350-$500 million. Independent estimates have put this figure at $30 million to $160 million. Irrespective of the yardstick used, revenues generated by the large pharmaceutical companies from their patented drugs are vastly higher, as these figures of revenue generation give evidence. In 1999 the revenue generation from ciproflaxin for Bayer was $1.63 billion, and that of fluconazole for Pfizer was $1.8 billion. Recovering the costs on the research and development is not the issue then; it is more involved in the expenses that come from other areas like marketing, with the changed emphasis on marketing. Looked at from the perspective of percentage of gross sales of a product, expenditure on R&D works out to 10-20%, but expenses on marketing and administration are almost double that at 30-40%. Besides this, the greed of the pharmaceutical companies for profit have ensured the need for the patent regime in pharmaceutical products to feed this greed, and therefore patented pharmaceutical products remain high priced even in areas where greater humanitarian attitudes need to prevail. The prices of patented pharmaceutical products in comparison with the prices of generic products in the treatment of HIV/AIDS provide clear evidence of this. Glaxo markets Lamivudine at a cost of $3,271 per patient per year, whereas generic manufacturers like Cipla Ltd and Hetero Drugs offer their generic versions at $190 and $ 98 respectively. Bristol-Myers Squibb markets Stavudine at $3,589 per patient per year, and Cipla and Hetero offer their generic versions at $70 and $47. Boehringer Ingelheim markets Nevirapine at a price of $3,508 per patient per year, while Cipla and Hetero offer their generic version at $340 and $ 202 respectively. There are no considerations shown by the large pharmaceutical companies even when it comes to drugs needed in the fight against a life threatening disease that is most important for a poor continent. A high price to pay indeed for the cost of research, and the profit of the large pharmaceutical companies! (Patents and monopoly prices). The Direct-To-Customer Advertising Strategy: In an attempt to boost the already booming drug prescription market, the pharmaceutical companies have come out with a novel marketing strategy in the Direct-to-Customer Advertising (DTCA) strategy. Their clout has seen FDA revising the regulations that govern the broadcast of pharmaceutical companies’ advertisements, to allow DTCA. The argument put forward for the need for DTCA is that it creates awareness of drugs, and thereby supports the autonomy of the patient in the patient physician relationship. It also is supposed to act a motivator for patients to seek healthcare for conditions that they had not brought to the notice of the physicians. These are good ideals indeed, but the impact of the DTCA, has not been to the benefit of the patients. The DTCA are brief, and as such do not provide the extensive technical details that are needed to ensure a fair assessment of the benefits to risk ratio of the concerned drug. DTCA has proven to be better at creating more drug awareness than the expected knowledge about drugs, and the conditions that the drugs are to be used in. This has led to impressive increases in the prescription drug sales, but has not provided any benefit on the health of the public. (Lyles, A., 2002). The choices of products that are advertised over DTCA give clear evidence that DTCA was introduced by the pharmaceutical companies to further their interests rather than the interest of the public. In case the cause of public interest was the motivation behind DTCA, then the prominence of DTCA should be for drugs available for untreated diseases. Yet, surprisingly eighteen percent of the fifty drugs that have come under DTCA are medicines used in the treatment of psychiatric and neurological disorders. Patients with these disorders often have impaired decision-making capacities, and this makes them vulnerable to the advertisements that they see via DTCA. This undermines the very basis of DTCA, which was the promotion of patient autonomy. (Hollon, M.F., 2004). Prescription habits of the doctors are subject to scientific evidence, commercial information, physician education, and patient preferences. Patient preferences are subject to DTCA information. It is quite likely that patient preference could cause a physician to overuse a drug. The case of Diane-35 (cyproterone-estradiol) is worth examining in this context. Diane-35 was a drug introduced with contraceptive properties, and a second line possibility of control of acne. The drug was introduced with advertisements showing clear skin women, and the advice to consult a doctor. Sales of Diane-35 went up, and it was due to its use more as an acne control drug, due to patient preference. A television documentary highlighting Diane-35 as nothing more than a normal contraceptive pill was to see the sales of Diane-35 drop. (Mintzes, B. & Morgan, S., 2005). Sales Promotion to the Doctors: The Medical Representatives are the primary sales promoters of pharmaceutical companies. Their role in the past was that of providing information to the physicians. This information consisted of pharmaco-kinetics and pharmaco-dynamics of drugs, as well as their side effects, in their efforts to promote their products. This was ethical selling. The change in marketing strategies toward the unethical side has seen the role of the medical representatives’ change from that of information providers to that of inducers for prescription by the giving of gifts and other inducements like sponsorship of educational and recreational activities to the physicians. This has raised ethical issues on the role of these inducements in the prescription habits of the doctors. Despite these issues many of the doctor fraternity continue to enjoy these benefits, and their prescription habits are definitely affected by these inducements, the quantum and quality of which continue to grow in leaps and bounds, as the unethical sales promotion strategies become more popular with the pharmaceutical companies in attempting to increase the sales of their products. (Are gifts from pharmaceutical companies ethically problematic? A survey of physicians). The pharmaceutical companies have not been satisfied with the use of incentives just to the physicians. They have now extended the net keeping in mind the old phrase “catch them young”. The provision of gifts and inducements has spread into the medical students’ fraternity too. In a recent study that looked into the exposure of medical students to drug companies, and their attitudes about pharmaceutical companies, it was found that medical students were at risk for unrecognized influence by drug marketing efforts. The study involved 826 third-year students at eight U.S. medical schools. Some of the findings were that more than eighty percent of these students believed that they were entitled to these gifts, and nearly sixty percent of these students thought that drug company sponsored grand rounds were likely to be biased. (Donya, C.A., 2005.) Illegal Sales Activities: Despite the booming prescription sales some of the large pharmaceutical companies are still not content with the already large profits that they are making, and indulge in activities that could be termed illegal, and find themselves facing court charges. The case of Pfizer, and the alleged illegal sales of human growth hormone, still hangs in the fire. The drug Genotropin was improperly promoted to doctors for use in anti-aging treatment. Charges have been brought against Pfizer on this issue, and currently Pfizer is fighting against it on technical grounds, which is based on the jurisdiction of the court. Irrespective of the findings of the court, it is an indication of how low even large pharmaceutical companies can stoop in their pursuit of unholy profits, as this is not the first instance of illegal promotion and sales. In 2005, the Swiss firm Serona had to pay a fine of $704 million to avoid the criminal and civil liabilities that it faced in the marketing of its anti-Aids wasting drug Serostim. Earlier, in 1999, Genentech was fined $50 million for the illegal marketing of its drug Protropin. All these are growth hormones and meant for use mainly in children, and yet it is marketed for adult use. (Edwards, J., 2005). Time for Self-Introspection: The marketing practices that reflect the least concern for the public has caused some of the companies to pause, and reflect on their marketing strategies and practices. This in itself is an acceptance of the flaws in the marketing of drugs by the pharmaceutical companies. This has come about due to the realization that the public concern being raised on the marketing practices of the pharmaceutical companies could lead to the authorities bringing curbs on the marketing activities, and hence the need for self-correction. The only way for the pharmaceutical companies to come out of the hole that they have created themselves is to practice what they preach. Their mission statement very clearly states a dedication to health, and well being of the public. This should be the basis of all their marketing activities. Making profits is fine, but it should be in such a manner that it is not at the expense of the business ethics, and concern for the sick that is a necessary ingredient in their sector of industry. (Viscomi, A.J., 2006). Conclusion: The drug market is booming, and still the marketing practices of the pharmaceutical companies has seen a shift to the pursuit of maximizing profits, and this is to the detriment of the sick, who need their drugs. The full scope of the availability of newer drugs that is possible by greater concentration on research and development is missing, because of the over-emphasis on marketing. The ethics that were present in the marketing activities of the pharmaceutical companies have gradually eroded to the point of non-existence, and the marketing practices in current times give rise for concern, with the possibility extending to illegal activities too in the search for larger profits. Humanitarian considerations, which should be a part of the marketing strategies in keeping with the mission of the industry of dedication to health and well-being, are totally missing. In short a revamp of the marketing practices of the pharmaceutical companies is long overdue, and essential. Literary References Angell, M. The Truth About the Drug Companies. Retrieved April 6, 2006, from, WANT TO KNOW.INFO. Web site: http://www.wanttoknow.info/truthaboutdrugcompanies. Are gifts from pharmaceutical companies ethically problematic? A survey of physicians. Archives of internal medicine, 2003, Vol. 163(18), Pp. 2213-2218. Donya, C.A. (2005). Medical students face heavy drug marketing. Nation’s Health. Vol. 35(9), Pp. 13. Edwards, J. (2005). Pfizers Legal Troubles Over Hormone May Grow. Brandweek. Vol. 46(45), Pp. 9. Hollon, M.F. (2004). Direct-to-consumer marketing of prescription drugs: a current perspective for neurologists and psychiatrists. CNS drugs. Vol. 18(2), Pp. 69-77. How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry. July 1998. Retrieved April 6, 2006. Web site: http://www.cbo.gov/showdoc.cfm?index=655&sequence=2. Lyles, A., (2002). Direct marketing of pharmaceuticals to consumers. Annual review of public health. Vol.23, Pp. 73-91. Mintzes, B. & Morgan, S. (2005). Medicine by media: did a critical television documentary affect the prescribing of cyproterone-estradiol (Diane-35)? CMAJ. 173(11), Pp. 1313-1315. Patents and monopoly prices. Retrieved April 6, 2006, from, Third World Network. Web site: http://www.twnside.org.sg/title/twr131b.htm. Viscomi, A.J. (2006). How to Restore Big Pharmas Image. Brandweek. Vol. 47 (4). Retrieved April 6, 2006, from MedScape. Waltz, A.J. (2003). CMS Report Analyzes Factors Affecting the Marketing of Prescription Drugs. Drug Benefit Trends. Retrieved April 6, 2006, from MedScape. Read More