The Sampling Subsidy - Pharmaceutical Executive


The Sampling Subsidy
Pharma can't afford to kill it or continue it. Alternatives are needed now.

Pharmaceutical Executive

The easiest solution—a total cessation of sampling—comes with the unacceptable risk of destroying the goodwill accrued with physicians and exposing the industry to increased governmental intervention. So modifying the current system seems more advisable. One viable alternative is to highlight the untapped benefits associated with bringing this hidden subsidy to light. Media coverage of the pharma industry focuses on rising prices, shrinking Rx coverage, and cheaper prices in Canada and Europe. Yet it goes unmentioned that a multibillion-dollar subsidy, financed exclusively by the pharma industry, is in place and growing.

So a case can be made that in configuring a new sample distribution system that quantifies, and perhaps even increases, the use of samples as a healthcare subsidy will generate public goodwill and potentially reduce the call for government controls.

Ultimately however, a more comprehensive revamping of the system needs to occur. What type of system could do this? The first step is to understand and quantify what physicians are giving to patients on a brand-by-brand basis versus just knowing what reps are leaving in the sample closet. These types of data are available and can be used to benchmark brands' performance against one another and quantify the sample ROI. Redeemable vouchers, distributed by physicians and redeemed at pharmacies, might address this issue. The vouchers could be designed with a "check box" specifically asking for the reason the patient was given samples. "Lack of prescription coverage" as one option to check will generate data that should shed light on the true value of this underground subsidy.

Any system that drives patients to the pharmacy will likely have other benefits as well. Roughly 40 percent of samples are dispensed with a prescription, but how many of those prescriptions are actually filled by the patient? Getting patients into a pharmacy to redeem their voucher has the potential to increase fulfillment rates.

Vouchers can also help mitigate another problem: samples that end up in the dumpster. ImpactRx does not collect data on samples that are thrown away because they have expired, but anecdotal accounts from physicians indicate that a significant quantity of samples are ultimately discarded.

This is not unexpected. Physicians are trained to diagnose and treat illnesses, and sales reps are trained to market and sell prescription drug products. But neither is trained in the nuances of inventory management. The current system cannot help but be inefficient. However, this is a real strength of pharmacies. Moving at least some sample distribution to pharmacies will take advantage of the efficiencies inherent in the electronic inventory, billing, and reporting infrastructures that already exist at pharmacies today.

Worth the Effort Implementing this will not be easy. Any system that has grown to $10 billion dollars in size will prove resistant to change. One of the first problems will be to herd all the major pharmceutical companies toward accepting a new sampling approach at roughly the same time. No one will want to unilaterally change first and expose their products to a potential competitive disadvantage by not having samples in the closet while competitors continue to stack the shelves.

Nor will all pharma companies likely agree on how a replacement system should be designed. The data shows wide differences in sample usage across therapeutic classes, product lifecycles, and even within companies. There will be winners and losers with any change.

These problems, however, are not insurmountable. The current system's ROI is so poorly understood that perhaps some forward-thinking companies will be willing to walk away from it in exchange for a new system with well-defined benefits. The companies that undertake this journey first will also benefit from having the most influence in shaping the new sampling paradigm.

It should also be noted that the industry has already started build the foundation for transitioning from the sample closet to the pharmacy. The use of coupons continues to increase, and physician behavior is adapting accordingly. In 2004, in some categories, 10 percent of newly diagnosed patients received coupons. (See "Sampling with Coupons,") Overall a significant number of patients and physicians have been prepped for change.

Although changing the current sampling system will be painful and messy, it is necessary. The level of inefficiency, waste, and unrecognized value in today's sample distribution makes it worth the effort. The pharmaceutical industry is at one of those rare conjunctions in business where everyone involved—the company, the physician, other healthcare providers, the patient, the pharmacy, and even the government—could all benefit from a new and improved way of doing things.

Nancy Lurker is president and CEO of ImpactRx and can be reached at
. Bob Caprara Bob Caprara is the company's senior vice-president, advanced analytics and market research, and can be reached at


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