Submodule 3.1 Final June 2007

Marketing Practices of the

Pharmaceutical Industry

Module 3.1

Objectives

• Recognize marketing strategies

• Perceive how you might be influenced by them

• Know the legal limits for the marketing of drugs

• Reflect on appropriate interactions between physicians and pharmaceutical companies

Marketing and Its Targets

• Marketing* is a set of processes for– Creating, communicating, and delivering value to

customers, and for– Managing customer relations in ways that benefit the

company and its stakeholders

• Primary target of pharmaceutical marketing: the prescriber—the physician

• Secondary targets: consumers, pharmacy benefits managers, large purchasers such as the Veterans Health Administration

*American Marketing Association

Interests and Obligations

Primary obligation of a drug company:to the SHAREHOLDERS:

to generate profits by means of sale of products

Primary obligation of a physician:to the PATIENT:

to provide high quality carein line with

the patient’s values and preferences

Interests of physicians and drug companies CONVERGE in the desire to develop and prescribe products that benefit patients

Obligations of physicians and drug companies DIVERGE

DoctorDrug co.

Coyle SL. Ann Intern Med 2002;136:396-402

Product, Price, Promotion, Placement: The 4 P’s of Traditional Marketing

Product :how the drug relates to needs and wants of potential users

Price: how to set a price, including discounts

Promotion: how to create demand for the drug by advertising, publicity, and person-to-person selling

Placement: how the drug might get to the prescriber and user

Sizing Up and Targeting Potential Markets

• Companies categorize customers based on their needs, characteristics, and behaviors (“market segmentation”)

• Each market segment has different potential for profitability

• Smart companies tailor their marketing plans (the 4P’s of product,

price, promotion, and placement) for each market segment

Think of the last few drug advertisements you saw on TV….Can you think of reasons a drug company might prioritize a direct-to-consumer marketing plan for such agents over a direct-to physician marketing plan?

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The Psychology (and Neurophysiology?) behind Marketing and Promotion

• In virtually every human interaction, the parties use influence tactics to persuade each other to change their thinking or behavior.

• The marketing and promotional activities of pharmaceutical companies are intended to persuade prescribers and patients to use their products.

• But it’s not just psychology: using brain MRI, neuroscientists have documented brain-activity changes corresponding to “brand influence.” (McClure SM, et al. Neuron 2004;44:379-387.)

– Brand recognition is a main goal of a company’s advertising strategy;– The corporate world is increasingly investing in neuro-marketing.

Promise of R eward Negative altercasting

Positive altercasting Pre-giving

Debt

Marwell G, Schmitt DR. Sociometry 1967;30:350-64.

Direct-to-Physician Promotion:A Word about Gifts

• When a physician is offered or accepts gifts that directly or indirectly benefit him- or herself (e.g., industry-sponsored meals, research funding, drug samples), the physician may be facing a situation in which the desire to do what benefits oneself may be in conflict with doing what’s best for the patient.

• Though most physicians believe their behavior is not influenced by gifts, research conclusively documents otherwise.

• What do you believe?

JAMA 2000;283:373-80

Statement Strongly Agree

Agree Neutral Disagree Strongly Disagree

When drug companies sponsor physicians to go to seminars at resort locations this biases the subsequent behavior of those physicians (e.g., they prescribe more of the company’s product).

When drug companies give physicians textbooks or other educational materials, this influences their subsequent behavior.

When drug companies give physicians pens, calendars, or other non-educational materials, this biases the subsequent behavior of those physicians.

Drug company promotions are less likely to be about unique drugs than about drugs that are essentially similar to drugs made by other companies.

Drug company gifts to physicians do not significantly increase health care costs to patients.

Product information presented in a drug advertisement provides you with educational material about the drug.

Once they have finished their formal training, have no alternative but to rely on drug company detailing to learn about new drugs.

Acad Med 2001;76:1271-7

Marketing Budgets of Major Pharmaceutical Companies

• This table is from a 2001 report called “Off the Charts: Pay, Profit, and Spending by Drug Companies” prepared by Families USA, a national nonprofit, nonpartisan organization devoted to the achievement of high quality, affordable health care for all Americans.

• The data show the proportion of revenues that companies allocate to marketing vs. to research and development. These data were obtained from the 2000 Securities and Exchange Commission filings of the 9 US pharmaceutical companies that market the 50 drugs most frequently prescribed for seniors.

• 8 of the 9 companies spent twice as much on marketing as on R&D

• What do YOU think? If marketing didn’t work, would drug companies spend so much on it?

www.familiesusa.org

The Law Limits Off-Label Promotion• By law, a company can promote a drug only for the indications for which the FDA

approved it (“on-label” use). • In contrast, once a drug is approved, physicians are legally allowed to prescribe it for

other uses (“off-label” uses) according to their clinical discretion.• Obviously, off-label use can greatly enlarge the size of a market for a given drug.• Promotion of off-label use has been a problem for certain drug companies recently,

as in the gabapentin example.• Clinical discretion notwithstanding, the fact is that much less is known about the

efficacy and safety of a drug prescribed for an off-label use—either the research and development has not been done, or the FDA has reviewed the available evidence for safety and/or efficacy and found it lacking.

• The bottom line is that off-label prescribing may in some cases place patients in harms’ way—or at the very least, waste health care resources.

• Put to the test of rigorous randomized control trials, off-label uses often come up short. A case is point is the atypical antipsychotic agents. Despite high hopes—and extensive off-label prescribing—government-sponsored trials showed that

– In patients with Alzheimer’s disease, their adverse effects offset any advantages in the treatment of psychosis, aggression, or agitation (Schneider LS et al. NEJM 2006;355:1525-38).

– When used for schizophrenia, most patients discontinue them because of inefficacy and intolerable side effects (Lieberman JA et al. NEJM 2005;353;1209-24).

Direct and Indirect Promotional Activities: The Neurontin Case Study• FDA approved Neurontin (gabapentin) in 1993

for the adjunctive treatment of partial complex seizures in patients over age 12 at doses <1800 mg/day.

• Litigation was brought against Parke-Davis in 1996 for its illegal promotion of off-label uses of Neurontin for pain syndromes and psychiatric conditions

• Because of the litigation, the company’s internal marketing and promotional plans for Neurontin became publicly available. These usually-proprietary documents illustrate the strategies and tactics a drug company may use to market and promote a new drug.

• Though the company’s promotion of off-label use of Neurontin was illegal, the marketing and promotional activities were not. They exemplify how companies market and promote new drugs.

Ann Intern Med 2006;145:284-93.

Neurontin: A Case Study

• The marketing and promotion plan for Neurontin included targeted marketing (a type of market segmentation used to influence specific physician groups) as well as indirect marketing (support of activities not overtly promotional)

• Targeted marketing and indirect marketing are legal activities and perfectly in line with drug companies’ obligations to shareholders to increase profits by increasing sales.

• Parke-Davis selected several physician groups for targeted marketing:

Frequent prescribersof anticonvulsants

Residents, to influence their prescribing habits right at the beginning of their career

AND…

Physicians who could influence gabapentin use among their colleagues:Local champions of the drug who were recruited to serve as speakers in peer-to-peer selling programs;

Thought leaders—influential physicians affiliated with major medical centers, whose advocacy was rewarded with honoraria, research grants, or educational grants

Tactics of Direct and Indirect Marketing and Promotion

• Budget planning documents of Parke-Davis obtained for the Neurontin court case contain line items for activities that most physicians would recognize as promotional:– Samples– Free merchandise (items of medical utility such as penlights,

books; patient assistance programs)– Medical journal ads– Professional promotional literature (convention giveaways,

patient brochures, reprints)

• As well as for activities not overtly promotional:– Professional education (speakers’ bureaus, advisory boards,

dinner meetings)– National speakers (honoraria and travel; speaker programs)

Promotional Activities with Unclear or Hidden Intent

• Court documents revealed a third type of activity, those with “hidden or unclear promotional intent”

• The intent of such activities is to disseminate favorable messages about a drug, thus boosting prescribing rates.

• In the Neurontin case, such activities included– Paying for research projects that would disseminate favorable

information about Neurontin– Expanding the gabapentin literature by paying medical education

companies to develop review articles or other publications– Sponsoring educational programs through unrestricted grants to medical

education or communications companies, which are for-profit companies specializing in producing conferences for physicians on behalf of pharmaceutical manufacturers

• What was illegal? Were the activities themselves illegal? No─it was the company’s promotion of off-label use that was illegal.

The Parke-Davis Neurontin case enabled us to get a look at marketing and promotion plans that are ordinarily never made public. The strategies and tactics themselves were not illegal—only the promotion of off-label use was—and they are commonly used by all pharmaceutical manufacturers to promote new drugs to physician-prescribers.

Another Way to Increase Sales: Clinical Guidelines

• Clinical practice guidelines are intended to embody the best in evidence-based medical practice.

• The term “evidence-based” implies that the recommendations are based on unbiased, objective conclusions drawn from the collection of relevant studies of the highest methodological quality.

• Guidelines are created by panels of physicians and other experts, who are expected to be unbiased and objective.

• Obviously, a pharmaceutical manufacturer stands to gain when clinical guidelines recommend that the use of their products represents state-of-the-art care.

• Take a moment and reflect on your views. How likely is it that a physician with strong ties to a particular drug company—let’s say, research funding over a 10-year period—could be an impartial and objective expert when serving on a guideline development panel considering the standards for use of a class of drugs developed by that company?

• Yet many guideline developers have such ties. One survey showed that, during the 1990’s, nearly two-thirds of physician panelists had relationships with companies whose drugs were considered in the guidelines they authored (Choudry et al, 2002).

• Click on one of the two products on the right side for a case study of the complex relationships among guideline developers, drug companies, and clinical practice.

JAMA 2002;287:612-7

Epogen Example• For example, Amgen, the manufacturer of Epogen (erythropoietin, a

protein that stimulates red cell production and helps to correct anemia), donated $4 million to the National Kidney Foundation in 2005 and sponsored the Foundation’s creation of clinical guidelines for patients with renal failure that included target hemoglobin levels. The Foundation and Amgen both say that the company did not influence the choice of members for the guideline development panel nor the content of guidelines they developed. In WHAT YEAR, the Foundation changed the guidelines to recommend a target hemoglobin of 11-13 grams (though the FDA labeling for Epogen recommends 10-12 grams). In November 2006, two randomized trials were reported in the NEJM showing that higher levels of hemoglobin conferred no benefit; one trial found higher levels increased the risk of serious cardiovascular events. The erythropoietin story is complicated by the fact that the federal reimbursement structure for dialysis clinics contains (inadvertent) incentives for use of higher doses of erythropoietin.

The New York Times. 30 Nov 2006;Sect C:1, 6

Xigris Example• In 2001 the FDA approved Eli Lilly’s Xigris (recombinant human activated

protein C or rhAPC, also known as drotrecogin alfa) for the treatment of sepsis. The approval was based mostly on the results of one randomized trial, and according to a recent editorial, there was deep division on the FDA’s advisory panel as to whether approval should be granted or withheld. To boost sales, in 2002 Lilly hired a public relations firm to market the drug. This company devised the “Surviving Sepsis” campaign, which, among other things, included assembling a group of critical care experts to draft clinical practice guidelines for the treatment of sepsis. These guidelines were published in 2004 in Critical Care Medicine. Lilly provided 90% of the funding for the panel’s work and the subsequent publication, and many of the expert panelists had ties with Lilly. The NEJM editorial by Eichacker et al provides information about other aspects of Lilly’s “Surviving Sepsis” campaign; some believe they are an egregious example of “promotional activities with unclear or hidden intent”. What do you think?

NEJM 2006;355:1640-2. The New York Times. 19 Oct 2006;Sect C:12

How Do Drug Companies Track the Effectiveness of Their Marketing Plans?

Steinman MA et al Ann Intern Med 2006;145:284-93

Eichacker PQ et al. NEJM 2006;355:1640-2

Prescriptions for Neurontin per quarter from 1994-2000, by diagnostic category

Sales of Xigris from years 2001-2006

Which Drugs Are Worth Marketing?Some Definitions from the FDA

A brand name drug is a drug marketed under a proprietary, trademark-protected name.

A generic drug is the same as a brand name drug in dosage, safety, strength, how it is taken, quality, performance, and intended use. Before approving a generic drug product, FDA requires many rigorous tests and procedures to assure that the generic drug can be substituted for the brand name drug. The FDA bases evaluations of substitutability, or "therapeutic equivalence," of generic drugs on scientific evaluations.

Patents are granted by the patent and trademark office and expire 20 years from the date of filing. Many factors affect patent duration.

Exclusivity is exclusive marketing rights granted by the FDA upon approval of a drug and can run concurrently with a patent or not. Exclusivity was designed to promote a balance between new drug innovation and generic drug competition.

www.fda.gov

What Happens When a Drug Goes Off Patent?

• The table is taken from the April 3 2006 issue of Drug Topics and shows some major drugs that lost patent protection in 2006 and the dollar amount of their 2005 sales.

• The statin drugs Zocor (Merck) and Pravachol (Bristol-Myers Squib) lost patent in 2006. If you were a pharmacy benefits manager, would you make a formulary change in 2007 and begin to move your clients from Lipitor (patent-protected till 2011) and on to cheaper generic forms of simvastatin or pravastatin?

• Drug companies understandably use many tactics to try and extend patent protection, including applying to the FDA for new on-label indications.

The Legal Boundaries of Marketing and Promotion

• We have already reviewed the legal boundary between a drug company’s promotion of on-label vs. off-label use.

• Other illegal acts that have been prosecuted by federal agencies include– Outright kickbacks to physicians– Promotion of unapproved uses for specific drugs by means of

pharmaceutical company support of educational activities that appear to be, but are not, independent educational activities

– Infringements against rules governing prescription drug advertising• Privacy infringements may also be illegal. How would you consider the

following case? The pharmacy units of a supermarket chain allegedly sold confidential prescription information to drug companies. The drug companies used that information to conduct targeted marketing campaigns during which patients were called and sent direct mail. The solicitations were made to look like they originated from their “concerned pharmacist” and encourage refills or switching to a different medication. Legal or illegal? http://www.privacyrights.org/medical.htm

J Health Law 2006;39:235-64

Ethical Principles Guiding Physicians’ Interactions with Pharmaceutical Companies

• What are your personal views on the following standards that Stanford, Yale, and other medical schools have recently enacted regarding interactions with industry (for the complete list, go to http://www.ama-assn.org/amednews/site/free/prl21009.htm):– No personal gifts of any size, under any circumstances– No compensation—including defraying costs—for attending a

continuing medical education event or other activity– No industry support directly to students and trainees

• Are these rules strict enough? Too strict? Why?• What personal standards govern YOUR interactions with

the pharmaceutical industry?Coyle SL. Ann Intern Med 2002;136:396-402, Brennan TA et al JAMA 2006;295:429-33

ReferencesMcClure SM, Li J, Tomlin D, et al. Neural correlates of behavioral preference for culturally familiar drinks.

Neuron. 2004;44:379-387.Marwell G, Schmitt DR. Dimensions of compliance-gaining behavior: an emipirical analysis. Sociometry.

1967;30:350-364.Dana J, Loewenstein G. A social science perspective on gifts to physicians from industry. JAMA

. 2003;290:252-255.Wazana A. Physicians and the pharmaceutical industry: is a gift ever just a gift. JAMA. 2000;283:373-380.Wilkes MS, Hoffman JR. An innovative approach to educating medical students about pharmaceutical promotion.

Academic Medicine. 2001;76:1271-1277.Families USA. Off the charts: pay, profits and spending by drug companies. July 2001. www.familiesusa.org.Schneider LS, Pierre TN, Dagerman KS, et al. Effectiveness of atypical antipsychotic drugs in patients with

Alzheimer’s disease. N Engl J Med. 2006;355:1525-1538.Lieberman JA, Stroup TS, McEvoy JP, et al. Effectiveness of antipsychotic drugs in patients with chronic

schizophrenia. N Engl J Med. 2005;353:1209-1223.Steinman MA, Bero LA, Chren M, et al. Narrative review: the promotion of gabapentin: an analysis of internal

industry documents. Ann Intern Med. 2006;145:284-293.Berenson A. Treatment of anemia questioned: kidney specialists to study drug use. The New York Times. 30

Nov 2006;Sect C:1, 6.Singh AK, Szczech L, Tang KL, et al. Correction of anemia with epoentin alfa in chronic kidney disease. N

Engl J Med. 2006;355:2085-2098.Drueke TB, Locatelli F, Clyne N, et al. Normalization of Hemoglobin level in patients with chronic kidney

disease and anemia. N Engl J Med. 2006;355:2071-2084.Eichacker PQ, Natanson C, Danner RL. Surviving sepsis – practice guidelines, marketing campaigns, and Eli

Lilly. N Engl J Med. 2006;355:1640-1642.

ReferencesBerenson A. 3 Doctors assail Lilly study of sepsis drug. The New York Times. 19 Oct 2006;Sect C:12.

Choudhry NK, Stelfox HT, Detsky AS. Relationships bewtween authors of clinical practice guidelines and the pharmaceutical industry. JAMA. 2002;287:612-617.

Drug Topics. Major drugs lose patent protection in 2006. 3 Apr 2006. www.drugtopics.com.

Zalesky CD. Pharmaceutical marketing practices: balancing public health and law enforcement interests; moving beyond regulation-through-litigation. Journal of Health Law. 2006;39:235-264.

Coyle SL. Physician-industry relations. Part 1: Individual physicians. Ann Intern Med. 2002;136:396-402.

Croasdale M. Some medical schools say no to drug reps’ free lunch. Amednews.com, 9 Oct 2006. http://ama-assn.org/amednews/site/free/prl21009.htm.

Brennan TA, Rothman DJ, Blank L. Health industry practices that create conflicts of interest: a policy proposal for academic medical centers. JAMA. 2006;295:429-433.

Elliott C. The drug pushers. The Atlantic Monthly. April 2006.

The End

• Congratulations! You have completed this first sub-module of Module 3.

• Our goal with the preceding material was to help you to:– Recognize marketing strategies and the psychology behind them– Perceive how you and other prescribers might be influenced by

them– Know the legal limits within which drugs can be marketed, and– Reflect on the nature of your relations with pharmaceutical

companies.• We hope the time you spent using this sub-module has

made you more aware of subtle influences on your thinking and behavior and helped you to become a more objective and always-ethical prescriber of medications to your patients.