Pharmaceutical Marketing, Capitalism, and Medicine: A Primer
Most industries have moved toward the realization that the most profitable resource to be extracted even from poor countries is not raw materials or labor, but the readiness to consume. To capitalize on this potential, firms take two allied approaches. First, they seek to influence exchange environments (distribution channels, treatment guidelines, reimbursement policies) to enhance the flow and profitability of their drugs. Second, they invest in doctor and consumer awareness campaigns, referred to as “education,” to stimulate demand directly. Here I’ll point out a few features of demand stimulation in pharmaceuticals.
Medicines were traditionally thought to be “inelastic goods”, meaning that promotion (or lowering prices) wouldn’t lead to an appreciable expansion of consumption. No one who doesn’t have high blood pressure, for instance, will start taking antihypertensive medicine because of a billboard advertisement, nor will people who already take it increase their dosage. Doctors prescribe these drugs to patients who require it, and we assume that doctors are informed by scientific studies, not advertisements.
Regrettably, this is often not true. Each link on the entire medical information chain—from research funding, to scientific journal publications, to FDA approval, to public health therapy guidelines, to product labeling, to the scientific programming at medical conferences, to medical education in medical schools and in the clinic—is the focus of concerted persuasion campaigns. If this sounds improbable, consider such representative datum as that there is a full-time drug rep for every seven doctors in the US or that the marketing budget for Pfizer’s Lipitor in 2002 alone was $1.3 billion—roughly the equivalent of the National Institute of Health (NIH) budget for research into Alzheimer’s disease, arthritis, autism, epilepsy, influenza, multiple sclerosis, sickle cell disease, and spinal chord injury combined.